Cost of Refinancing Your Mortgage

You can expect to pay between 3% and 6% of the principle amount of your mortgage in closing costs. You can either roll the closing costs into the mortgage amount or pay for them with cash. If possible, pay the closing costs up front to avoid paying interest on them for the life of the loan.

Consider all of your options

  • Cash out refinance
    Borrow an amount greater than what you owe on your home so you can receive the difference in a cash payment.
  • Rate and term refinance
    You can change the interest rate and/or the term of the loan.
  • Streamline Your FHA Mortgage
    Your interest rate or repayment period changes, but your credit and debt-to-income ratio are not evaluated as part of the approval process. In order to qualify, your resulting monthly payment must be lower than your current payment, and it must be an FHA or VA loan.
  • Making Home Affordable
    This is a program designed for people holding a Fannie Mae or Freddie Mac mortgage who owe more than their home is worth. To be eligible, you must be current on your mortgage payments.

Mortgage Refinancing Options

To learn more about refinancing and evaluate whether or not it makes financial sense for you, start by contacting your current lender. He or she might be able to offer you discounted fees and closing costs. Contact five or six other mortgage lenders to make sure you are getting the best offer. The following is a review of refinancing options.

  • Fixed rate mortgages
    Interest rates and monthly payments are set when you apply for the mortgage and remain the same for the entire life of the loan.
  • Adjustable rate mortgages
    There is a low introductory interest rate that is fixed for certain period of time, usually three to ten years. After the introductory period is over, the rate can adjust periodically based on a market index. If there is an adjustment cap, the interest rate can't increase more than the cap in any one adjustment period. If there is an interest rate ceiling, the interest rate can't go over the ceiling during the life of the loan.
  • Renovation loans
    The amount you are able to borrow is based on the projected value of your home after the renovations are complete. This type of loan provides a good alternative to a second mortgage. You can include your original mortgage in the refinance and get extra cash to fund your improvement project.
  • Cash out refinance
    Borrow more than what you owe on your home and receive the difference in a cash payment.
  • Streamline Your FHA Mortgage
    Your interest rate or repayment period changes, but your credit and debt-to-income ratio are not evaluated as part of the approval process. In order to qualify, your resulting monthly payment must be lower than your current payment, and it must be an FHA or VA loan. Click Here for more information.
  • Making Home Affordable
    This is a program designed for people holding a Fannie Mae or Freddie Mac mortgage who owe more than their home is worth. To be eligible, you must be current on your mortgage payments. Click here for more program information.

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