See if you could save with refinancing

When you want to use the equity in your home for expenses

A cash-out refinance replaces your current mortgage with a new one, but it’s coupled with a higher loan amount that allows for cash to be pulled out from the equity in the home.

• Use the additional funds for home renovations, debt consolidation, college tuition or other needs.
• Interest rates for cash-out refinances are generally higher, and there are stricter qualifying requirements than rate-and-term refinances. Cash out refinances also have lower loan-to-values (LTVs) than rate-and-term refinances.
• With a cash out refinance, you can keep one monthly mortgage payment instead of adding a home equity loan or HELOC payment. Interest rates may be lower with a cash out refinance, however closing costs are typically higher.

When you want a lower interest rate or shorter term for your mortgage.

With a rate-and-term refinance, you can replace your current mortgage with a new one that has more beneficial terms.

• Get a lower interest rate, remove Private Mortgage Insurance (PMI), go from an adjustable rate mortgage (ARM) to a fixed rate mortgage or even get a shorter term for your loan.
• Rate-and-term refinances generally have more favorable interest rates and allow for higher loan-to-values (LTVs) than cash out refinances.
• A rate-and-term refinance can include the payoff of a second mortgage if the second mortgage was used to purchase the home. A rate-and-term refinance does not allow for additional cash out — the loan amount is limited to the payoff of the current mortgage (and second mortgage used to purchase the home, if applicable), plus closing costs.