Refinancing may make sense to lower your rate, change your loan term, or access home equity. A cash-out refinance replaces your mortgage with a larger loan, providing funds for home improvements, paying off higher-interest debt, or investment purposes. Compare closing costs, your new mortgage rate, and total repayment costs to determine whether it fits your goals.
A HELOC lets you borrow against available home equity as needed without replacing your existing first mortgage. It may help fund renovations, consolidate higher-interest debt, or support investment opportunities. Rates are typically variable, so payments can change. Your home secures the debt, and missed payments can lead to foreclosure. Borrowing to invest adds risk because returns are not guaranteed.
One point equals 1% of your loan amount, or $1,000 on a $100,000 loan. Discount points are optional upfront fees paid to lower your interest rate.
Points may be worthwhile if you keep the loan long enough for monthly savings to recover the upfront cost. We can help you calculate that break-even point.
The annual percentage rate (APR) reflects your interest rate plus certain loan costs, expressed as a yearly percentage. Compare APRs, rates, and fees on Loan Estimates for similar loans.
A rate lock protects your quoted interest rate for a set period, subject to its terms. Ask about the expiration date, any fees, and what happens if your closing is delayed.
Requirements vary by loan program, but commonly requested documents include:
Self-employed borrowers may need additional business records. Your loan officer will provide a personalized checklist.
Lenders review your credit score, payment history, balances, and recent credit activity alongside your income and debts. Review your credit reports for errors at AnnualCreditReport.com before applying.
Pay bills on time, reduce credit card balances, and avoid unnecessary credit applications. Dispute credit report errors and maintain consistent habits; improvements take time and results vary.
An appraisal is a professional opinion of a property's market value. Lenders generally use it to confirm that the property supports the requested loan amount, though some loans qualify for an appraisal waiver.
PMI protects the lender if you default and is typically required on conventional loans with less than 20% down. Its cost varies, and it may be canceled or automatically terminated when applicable requirements are met.
This structure combines an 80% first mortgage, a 10% second mortgage, and a 10% down payment. It may help avoid PMI, but you should compare the combined payments, rates, and fees with other options.
You sign the final loan documents and pay any remaining closing costs and down payment. For a purchase, ownership transfers and you receive the keys once funding and required recording are complete. Review your Closing Disclosure beforehand and complete a final walkthrough.
