Understand the break-even point
Divide your total closing costs by the monthly savings from the new rate. If you'll stay in the home longer than that number of months, the refi pays for itself. If not, keep the current loan.
Rate-and-term vs cash-out
A rate-and-term refi lowers your rate or shortens your term without pulling equity. A cash-out refi replaces your mortgage with a larger loan and gives you the difference in cash for renovations, debt consolidation, or investment.
Cash-out refi vs HELOC vs home equity loan
A cash-out refi resets your first mortgage at today's rate. A HELOC is a revolving credit line at a variable rate. A home equity loan is a fixed second mortgage. Choose based on how much cash you need, how long you'll carry the balance, and whether your current first-lien rate is worth keeping.
Streamline programs
FHA Streamline, VA IRRRL, and USDA Streamline refis skip appraisal and income verification when you're lowering your rate on the same program. They close fast and cost less.
Common mistakes
Rolling closing costs into the loan can wipe out savings. Extending back to a 30-year term when you're 8 years into your current one adds interest even if the payment drops. Always compare the total interest paid, not just the monthly payment.
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