How Conventional Refinancing Works

Refinancing a mortgage, in the simplest terms, replaces your existing home loan with a new one.

It’s often done to take advantage of lower interest rates, change loan terms, switch loan types, or (in the case of a cash-out refinance) to access home equity. Mortgage refinance rates determine your new cost of borrowing and directly affect your monthly payment and total interest paid over time.

Rates are displayed above and update regularly based on market conditions and borrower qualifications.

How Conventional Refinance Rates Are Determined

The refinance rates on this page are a starting point, but your personalized rate will depend on both your unique financial situation and broader economic factors.

The bond market, inflation expectations, and Federal Reserve policy all have an impact on mortgage rates.

Your personal situation also plays a key role in shaping your mortgage rate. Your credit score, debt-to-income ratio, loan amount, and down payment all affect your final rate.

Loan-to-value ratio (LTV) also affects your rate and eligibility. LTV compares the loan balance to the home’s value. Lower LTV ratios often receive stronger pricing because they represent lower risk to the lender.

Your final interest rate and Annual Percentage Rate, or APR, depend on verified financial information and loan structure. APR reflects both the interest rate and certain loan costs, providing a broader measure of total borrowing cost.

Types Of Mortgage Refinance Loans

Most conventional refinances fall into two primary categories, with additional program-specific options available.

A rate-and-term refinance simply replaces your loan, while a cash-out refinance replaces your mortgage with a larger one and lets you take a portion of your equity as cash.

Rate-And-Term Refinance

A rate-and-term refinance, sometimes called a no cash-out refinance, adjusts the interest rate, loan term, or both without providing cash back to the borrower.

This option is commonly used to lower monthly payments, reduce total interest paid, or shorten the payoff timeline.

Cash-Out Refinance

A cash-out refinance increases the loan balance and converts a portion of home equity into cash at closing.

Homeowners often use cash-out refinances to fund renovations, consolidate higher-interest debt, or cover major expenses.

Cash-out refinances typically require full underwriting and an appraisal. Because the loan balance increases, rates may be higher than comparable rate-and-term refinances.

Calculate Your Break-Even Timing

Breaking even on a refinance means how long it takes your monthly savings to outpace the costs of the refinancing.

That can include lender fees, appraisal fees, title costs, and more.

You can use our calculator below to get an idea of your break-even timing. Keep in mind that you’ll need to connect with an expert loan officer to get an accurate break-even estimate.

Frequently Asked Questions About Mortgage Refinance Rates

How Much Does It Cost To Refinance A Mortgage?

Refinancing typically includes lender fees, appraisal, title services, and other closing costs. Total expenses vary by loan size, property location, and lender structure.

When Is The Best Time To Refinance?

Refinancing may make sense when market rates are lower than your current rate, your credit profile has improved, or your financial goals have changed.

Does Refinancing Reset My Loan Term?

It can. Some borrowers choose a new 30-year term, while others select a shorter term to accelerate payoff.

Will Refinancing Affect My Credit Score?

A refinance requires a credit inquiry, which may cause a temporary, minor impact. Over time, improved loan terms or lower debt obligations may positively influence your credit profile.