Your equity
How much of the property you own outright. More equity generally means better pricing and more program options, and it sets the ceiling on any cash-out.
A refinance should pay for itself.
Refinancing replaces your existing loan with a new one — for a better rate, a different term, or access to your equity. It costs money to do, which means the only question that matters is whether the benefit outruns the cost.
Two different reasons to refinance.
A rate-and-term refinance changes what you pay or how long you pay it, without pulling equity out. A cash-out refinance replaces your loan with a larger one and hands you the difference. They are underwritten differently and priced differently, so it is worth being clear about which one you actually want.
We run the break-even before recommending either: what the refinance costs, what it saves each month, and how long you need to keep the loan for it to have been worth doing. If that number does not work, we will tell you not to refinance.
- Lowering the rate or the monthly payment
- Shortening the term to pay off sooner
- Pulling equity out for renovations, debt, or another purchase
- Getting out of a loan that is maturing or adjusting
- Removing a borrower from the loan after a life change
The break-even question
A refinance has closing costs. Divide those by the monthly savings and you get the number of months before you are ahead. If you might sell or refinance again before then, the deal does not work — and that is worth knowing before you start, not after.
What we look at.
Three things decide whether a refinance makes sense and what it will cost.
The math
Cost against monthly benefit, and how long you plan to keep the property. This is the part most lenders skip and the part that actually determines the answer.
What you are replacing
A maturing balloon, an adjusting rate, or mortgage insurance you no longer need can each justify a refinance even when the headline rate barely moves.
Cash-out refinance, or a second mortgage?
If your existing first mortgage carries a rate you will not beat today, refinancing the whole balance to access equity can be an expensive way to get it. A HELOC or second mortgage leaves that first loan alone and borrows only against the equity, which is frequently the cheaper answer. Which one wins depends on your current rate, how much you need, and whether you want a lump sum or a line you draw against. We will price both.
What we will ask you for
What we will ask you for
- Your current mortgage statement
- Most recent property tax bill and homeowners insurance declaration
- Last 2 years of W-2s or 1099s, and recent pay stubs
- Last 2 months of bank and investment statements
- 2 years of federal tax returns, all pages and schedules
- Any HOA statement, and the lease if the property is rented
Common questions.
How much equity do I need?
It varies by program and by whether you are taking cash out. Rate-and-term refinances generally need less equity than cash-out, and owner-occupied needs less than investment property. If you are not sure where you stand, send us the address and your current balance and we will tell you before you pay for anything.
Will I need a new appraisal?
Usually, though some loans qualify for an appraisal waiver depending on the property and the amount of equity. We will know early in the process and tell you either way, since it affects both cost and timeline.
Can I refinance an investment property?
Yes, including cash-out. Pricing and equity requirements are different from an owner-occupied loan. If personal income is difficult to document, a DSCR refinance qualifies on the property’s rent instead.
Does refinancing restart my loan term?
It does by default — a new 30-year loan starts a new 30 years, which can mean paying more total interest even at a lower rate. You can refinance into a shorter term instead. We will show you both so the decision is deliberate rather than accidental.
How soon after buying can I refinance?
Sooner than most people assume, though some programs impose a waiting period, particularly for cash-out. If rates have moved since you closed, it is worth asking rather than assuming you have to wait.
Find out whether it is worth doing.
Send us your current loan and what you are trying to accomplish. We will run the break-even and tell you honestly if the answer is no.