Refinancing at a Glance

There are generally two reasons to refinance: change the interest rate and/or term, or borrower against your equity to get cash out.

A Rate and Term refinance is used to replace your existing loan with one having a different interest rate and/ or loan term.  This usually means getting a lower rate, which can save you a lot of money monthly and over the term of your loan.

The rule of thumb is it’s a good idea to refinance if you can recoup the closing costs within three years.

A Cash-Out refinance is getting a new loan to pay off your existing , plus pulling additional cash out of your equity.  This “cash out” can be used for a variety of purposes.  Most common are debt consolidation to replace high interest debt or reduce your overall monthly expenses, home renovations, or college tuition.

How would you use the extra cash?