Refinancing is a math problem, not a rate.
A lower rate is only worth having if you keep the loan long enough to pay for getting it. We run the break-even first, and when the answer is that you should stay where you are, that is what we tell you.
How long until the refinance pays for itself?
| Step | Worked example |
|---|---|
| Your payment now | $1,940 principal and interest |
| Your payment after | $1,790 principal and interest |
| Monthly saving | $150 |
| Cost to close | $3,600 |
| Break-even | $3,600 divided by $150, so 24 months |
| The decision | Worth it if you keep the house past two years. Not if you are moving next spring. |
Illustrative arithmetic, not a quote. Two traps sit inside this simple sum. First, rolling costs into the loan does not make them free, it just moves them. Second, restarting a 30-year clock on a loan you are eight years into can raise lifetime interest even while the monthly payment falls. We show both numbers, not just the one that sells the refinance.
Rate-and-term, or cash-out.
| Rate-and-term | Cash-out | |
|---|---|---|
| What it does | Changes the rate or the term | Increases the balance and returns the difference in cash |
| Credit floor | 620+ | 640+ |
| Max LTV | 97% | 80% |
| Typical use | Lower payment, drop mortgage insurance, shorten to 15 years | Renovation, debt consolidation, a down payment on the next property |
| Pricing | Better | A step behind, because the risk is higher |
Cash-out is the more expensive of the two and the more useful one. If the plan is to consolidate higher-interest debt, compare the blended cost honestly: moving a balance from 22% revolving to a fixed first mortgage can be a genuinely good trade, but only if the card does not refill.
Four reasons to refinance that are not the rate.
FHA carries MIP for the life of most loans
Enough equity can move you to a conventional loan without it, which sometimes beats a rate cut
30 down to 15
The payment rises, lifetime interest falls sharply
Before it adjusts
Fixing the rate is worth paying a little for when the adjustment window is close
Divorce or a departing co-borrower
A refinance is usually the only way to release someone from the note
Before you refinance.
How much does a refinance cost?
Expect appraisal, title, recording and lender fees. We charge no application fee and no broker fee to you, and third-party costs pass through at invoice on your Loan Estimate. The number that matters is not the rate, it is the total cost divided by the monthly saving.
How far does the rate need to drop?
There is no magic number, and the old "one percent rule" is folklore. On a large balance a quarter point can break even inside two years. On a small balance a full point may never pay back. Run your own numbers rather than a rule of thumb.
Will refinancing reset my 30 years?
It will unless you ask for a shorter term. If you are seven years into a 30-year loan, refinancing into a new 30 lowers the payment while extending the finish line. Refinancing into a 23-year or 20-year term keeps the timeline honest.
Can I refinance an investment property?
Yes, and for a rental it does not have to be a conventional refinance. A DSCR refinance qualifies on the property's rent instead of your income, which is often the route when tax returns make a conventional file difficult. Investment property financing is placed nationwide, while owner-occupied refinancing is Illinois only.
Do you pull credit to run the numbers?
Not at first. We can model the break-even from your current payment, balance and rough credit band. A soft pull comes only when you authorize it.
Find out if it is worth doing.
Send your current payment, your balance and roughly where your credit sits. We will run the break-even and tell you plainly whether to move or stay put.