Today's Mortgage Refinance Rates

How Mortgage Refinancing Works

Refinancing replaces your existing home loan with a new mortgage. Our guide to how mortgage refinancing works covers the process from application through closing.

You might refinance to lower your interest rate, change your loan term, switch loan types or access home equity through a cash-out refinance. Your new refinance rate affects your monthly principal-and-interest payment and the amount of interest you pay over time.

Rates can change with market conditions and borrower qualifications. You can compare current mortgage rates as well as conventional refinance rates, FHA refinance rates, VA refinance rates and jumbo refinance rates.

Timing can also affect your options. If you bought or refinanced recently, check how soon you can refinance after buying and consider when to refinance before replacing your current loan.

How Refinance Rates Are Determined

Mortgage refinance rates reflect both broader financial markets and the details of your application. Bond-market conditions, inflation expectations and Federal Reserve policy can all influence mortgage rates.

Your credit profile, debt-to-income ratio, loan amount, equity position, property and loan structure can also affect the rate available to you. If your credit has changed since you obtained your current mortgage, review what to expect when you refinance with bad credit.

Loan-to-value ratio, or LTV, compares the loan balance with the home's value and can affect both eligibility and pricing. A combined loan-to-value calculator can help estimate how much of your property's value is already financed. Depending on the refinance program, an appraisal may be required to establish the home's value.

Your final interest rate and annual percentage rate, or APR, depend on verified financial information and the structure of the new loan. APR incorporates the interest rate and certain borrowing costs. Paying discount points can reduce the interest rate in exchange for an upfront cost, while a mortgage rate lock can hold agreed-upon pricing for a specified period while the loan is processed. Your Loan Estimate shows the proposed rate, APR, payment and itemized closing costs.

Types Of Mortgage Refinance Loans

Your refinance options depend on your current mortgage, how much equity you have and what you want the replacement loan to accomplish. Most mortgage refinances fall into rate-and-term or cash-out categories, with additional options for government-backed mortgages.

Rate-And-Term Refinance

A rate-and-term refinance replaces your existing mortgage and changes the interest rate, loan term or both without converting a significant amount of home equity into cash. You can compare that structure with a cash-out loan in a cash-out vs. no-cash-out refinance.

A rate-and-term refinance can also be used in situations such as refinancing to remove PMI or refinancing an FHA loan into a conventional loan when eligibility requirements are met.

Cash-Out Refinance

A cash-out refinance replaces your current mortgage with a larger loan and converts some of your home equity into cash at closing.

The funds can be used for purposes such as home renovations or paying off higher-interest debt. The larger balance increases the amount secured by your home.

Loan program and lender requirements determine how much equity you can cash out and the credit requirements for a cash-out refinance.

If you want to access equity without replacing your existing first mortgage, compare a HELOC vs. cash-out refinance or a cash-out refinance vs. home equity loan. A HELOC and a home equity loan leave the existing first mortgage in place.

Streamline Refinances

Some government-backed mortgages have streamline refinance options with different underwriting and documentation requirements from a standard refinance.

An FHA streamline refinance is available for an existing FHA-insured mortgage. Eligible borrowers with an existing VA-backed mortgage can consider a VA Interest Rate Reduction Refinance Loan, or IRRRL. USDA borrowers may have access to a USDA streamline refinance.

Alternatives To Refinancing

Replacing your mortgage is not the only way to change your payment or access equity. If your goal is to lower the payment without replacing the interest rate, compare a mortgage recast vs. refinance.

If you need to borrow against your equity while keeping your first mortgage, compare a second mortgage vs. refinance.

How To Compare A Refinance With Your Current Mortgage

A lower interest rate alone does not show whether refinancing will save you money. Compare the remaining cost of your current mortgage with the proposed replacement loan, including the new rate, APR, term, monthly payment and closing costs.

Extending the repayment term can reduce the monthly principal-and-interest payment while keeping you in debt longer. Shortening the term can increase the payment while reducing the payoff timeline.

The Loan Estimate for each refinance offer gives you a standardized way to compare the proposed interest rate, APR, projected payment and closing costs.

Calculate Your Refinance Break-Even Point

Your refinance break-even point estimates how long it takes for recurring savings from the new loan to recover your upfront refinance costs.

For example, $6,000 in refinance costs divided by $200 in monthly savings produces a simple break-even period of 30 months. This calculation is most useful when considered alongside how long you expect to keep the replacement mortgage.

Closing costs can include lender charges, appraisal costs, title expenses and other fees. Review a refinance closing cost breakdown and typical considerations for how much refinancing costs before comparing your savings.

Use the refinance break-even calculator below to compare estimated refinance costs with potential monthly savings. Other mortgage calculators can help model different payment and loan scenarios.

Mortgage Refinance FAQs

When Does Refinancing A Mortgage Make Sense?

Refinancing can make sense when the benefits of the replacement mortgage outweigh its costs. Compare your existing loan with the proposed refinance based on the interest rate, APR, remaining term, new term, monthly payment and closing costs. How long you expect to keep the new mortgage affects whether you have enough time to recover the upfront costs.

Do I Need A Lower Interest Rate To Refinance?

No. A lower interest rate is one reason to refinance, but you could also replace your mortgage to change the repayment term, switch loan programs, move between fixed and adjustable rates or access equity through a cash-out refinance.

How Much Does It Cost To Refinance A Mortgage?

Refinance costs vary with the lender, loan type, property and transaction. Your Loan Estimate shows the projected closing costs for a specific offer. Compare those expenses with the expected monthly and long-term effects of the new loan.

What Is The Difference Between A Rate-And-Term And Cash-Out Refinance?

A rate-and-term refinance changes the terms of your mortgage without converting a significant amount of equity into cash. A cash-out refinance increases the loan balance and gives you part of your home equity as cash at closing.

How Much Equity Do I Need To Refinance?

Equity requirements vary by loan program, property type, occupancy and refinance purpose. Your loan-to-value ratio compares your new mortgage balance with the home's value and can affect both eligibility and pricing.

Can I Refinance An FHA Loan?

Yes. Depending on your situation, an existing FHA mortgage can be refinanced through an FHA refinance program or replaced with another eligible loan type. An FHA streamline refinance is specifically designed for an existing FHA-insured mortgage.

Can I Refinance A VA Loan?

Yes. Eligible borrowers with an existing VA-backed mortgage can consider an IRRRL. VA borrowers may also have a separate cash-out refinance option, which follows different requirements.

Can I Refinance Soon After Buying A Home?

Sometimes, but the waiting period depends on the refinance program, your existing loan and the type of refinance you want. Some loan programs impose seasoning or payment-history requirements before a new refinance can close.

What Is A Good Break-Even Point For Refinancing?

There is no universal break-even period that makes a refinance worthwhile. Compare your estimated break-even point with how long you expect to keep the replacement mortgage. A shorter expected ownership or loan period leaves less time to recover closing costs.

Can I Refinance With The Same Lender?

Yes. You can refinance with your current lender or a different lender. Comparing multiple offers can help you evaluate differences in interest rates, APRs, closing costs, lender credits and loan terms.