Refinance to lower your monthly payment
If your financial goals have changed, refinancing may help lower your monthly payment by reducing your interest rate, removing mortgage insurance (when eligible), or adjusting your loan terms.
What is a Rate and Term Refinance?
Both lowering your monthly payment and switching loan types fall under a type of mortgage called a rate and term refinance. Instead of taking money out from your home equity (a cash-out refinance), a rate and term refinance replaces your existing mortgage to change your interest rate, loan term, loan type, or a combination of all three. Depending on your goals, refinancing may help reduce your monthly payment, remove mortgage insurance, switch from an adjustable-rate to a fixed-rate mortgage, or better align your loan with your long-term financial plans.
Highlights
Ways refinancing can lower your monthly payment
Lower your interest rate
If interest rates are lower than when you purchased your home, or your financial profile has improved since taking out your mortgage, refinancing into a lower interest rate may reduce your monthly principal and interest payment while lowering the total amount of interest you pay over time.
Refinancing to a lower payment might be worth exploring if...
- Your monthly mortgage payment has become difficult to manage.
- Interest rates have improved since you purchased your home.
- You've built equity and want to eliminate mortgage insurance.
- Your household expenses have increased.
- You want more flexibility in your monthly budget.
- You plan to stay in your home long enough for the monthly savings to offset refinancing costs.
Things to consider before getting a rate and term refinance
While a rate and term refinance can be a great option for many borrowers, it might not be right for everyone. Here are some things to be aware of before you refinance to lower your monthly payment:
- Closing costs apply
- A longer loan term may cost more over time
- Qualification requirements still apply
- Timing matters when trying to switch to a lower rate
If you need help deciding if this is the right option for you, let us know!
How it works
1. Talk with a Loan Officer
We'll review your current mortgage, monthly payment, and financial goals to determine whether refinancing makes sense.
2. Compare your options
Review different interest rates, loan terms, estimated monthly payments, and closing costs to find the option that best fits your needs.
3. Apply
Complete your refinance application and provide any required documentation.
4. Complete the mortgage proccess
We'll verify your information, order an appraisal if needed, and prepare your new mortgage.
5. Close on your new loan
Your current mortgage is paid off and replaced with your new loan. You'll begin making payments under your updated terms.
Frequently Asked Questions
We’re here to help! Find answers to your everyday banking questions.
The amount you could save depends on your current mortgage balance, interest rate, remaining loan term, available equity and new loan terms. Your payment may be reduced by securing a lower interest rate, removing mortgage insurance when eligible, extending your repayment term or combining more than one of these strategies. We can compare your current mortgage with your refinance options to estimate the potential monthly and long-term savings.
It may. Homeowners with an FHA loan sometimes refinance into a conventional mortgage after building enough equity and meeting conventional loan requirements. Homeowners who already have a conventional loan may also qualify to cancel private mortgage insurance without refinancing, so it is important to compare both options before replacing your mortgage. Conventional refinance borrowers with less than 20% equity may still be required to carry private mortgage insurance.
It can be. A small rate reduction may still create meaningful savings on a large mortgage balance, especially when combined with the removal of mortgage insurance or a different loan term. Refinancing may also make sense if you want to replace an adjustable-rate mortgage with a fixed-rate loan. Compare the total closing costs, monthly savings and long-term interest before deciding.
Yes. An increase in your home’s value may give you more equity, which could improve your refinance options. Additional equity may help you qualify for more favorable terms or remove mortgage insurance when eligible. Your lender may require an appraisal or another approved method of confirming the property’s current value.
Applying for a refinance usually involves a credit inquiry, which may temporarily affect your credit score. Opening the new mortgage and closing the previous one may also cause short-term changes to your credit profile. Credit is only one part of refinance eligibility, along with income, debt, equity and other loan requirements.
Yes. There is generally no lifetime limit on how many times you can refinance, but each new loan must meet the applicable program and lender requirements. Some loan programs have waiting periods or seasoning rules. Because every refinance includes costs, it is important to confirm that the expected benefit supports replacing your current mortgage again.
An appraisal is commonly required to confirm your home’s current market value, but it may not be necessary for every refinance. Certain streamline programs or qualifying conventional transactions may offer an appraisal waiver. Your eligibility depends on your current mortgage, property and new loan program.
One way to evaluate a refinance is to calculate your break-even point. Divide the closing costs you pay by your estimated monthly savings to see approximately how many months it may take to recover those expenses. You should also consider how long you plan to keep the home, whether your loan term is restarting and how the refinance affects the total interest you may pay.
Yes. A rate and term refinance changes the structure of your mortgage without using the transaction to borrow against your home equity. Depending on your eligibility, you may be able to lower your interest rate, adjust your term, remove mortgage insurance or switch loan types without completing a cash-out refinance.