Home Refinancing

Learn how a mortgage refinance works, how much it will cost, reasons to refinance and whether refinancing is right for you. 

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How Exactly Does a Refinance Work?

How Does a Refinance Work?

When you built or bought your home, your mortgage payments were calculated according to the price of the home, your down payment, the number of years for the loan term and the interest rate at the time.

If you refinance your home, you start over with a new mortgage, but the new mortgage will be for the amount you have left on the loan and calculated with today’s interest rate, which could be lower.

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How Much Will It Cost to Refinance?

How Much Will It Cost to Refinance?

As with many things in home buying, the answer is, “It depends.” The amount is typically between 1-3% of the new loan amount. It could be worth it if that amount pays for itself in a reasonable amount of time with the savings you receive from a lower monthly payment.

However, if you have been in your home for a short time or if your original mortgage loan was at a reasonably low interest rate, it may not be in your best interest to refinance. If you’re deciding whether a refinance makes sense, you’ll want to figure out how long it will take to pay for itself.

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Reasons to Refinance Your Mortgage

  1. Secure a Lower Interest Rate

  2. Shorten the Loan's Term

  3. Profit From Your Home's Increased Value

  4. Convert to an Adjustable-Rate or Fixed-Rate Mortgage

  5. Tap Equity or Consolidate Debt

  6. Benefit From an Improved Credit Score

Use this checklist to find out whether refinancing is right for you:

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    Determine how long it will take for your new loan to pay for itself.

  2. completed process

    Use a mortgage refinance calculator to find your new payment amount.

  3. completed process

    Research estimated cost of filing and closing fees.

  4. completed process

    Decide whether you’re willing to have a new loan with new terms.

  5. completed process

    Understand the time and effort involved in a refinance.

  6. completed process

    Check your credit score and decide if you need to improve it before you refinance.

Speak with a local Cadence Bank Mortgage Loan Officer if you want to see your refinancing options.

Alternatives to Refinancing Your Mortgage

Home Equity Loan

A home equity loan is a second mortgage that operates similarly to the first mortgage but usually charges a slightly higher rate.

Home Equity Line of Credit

A home equity line of credit (HELOC) is a revolving form of debt that, like a credit card, can be drawn upon and paid off as soon as possible.

Personal Loans and Other Methods

There are ways to borrow money without mortgages or home equity. Consumers who need a small sum of cash for a short period of time may want to consider taking out a personal loan or using credit cards. However, these may charge higher interest rates than mortgage loans.
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Resources Refinancing Insights

Calculator Refinance Calculator

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Article The Pros and Cons of Refinancing Your Home

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All mortgage loans, refinances and equity lines of credit are subject to credit approval and program guidelines. This is not a commitment to lend or rate guarantee. Interest rates are subject to change without notice and are dependent on credit score. For HELOCs, eligibility requirements apply. Program terms, including equity requirements, draw and repayment periods, property requirements, closing costs and other restrictions vary by state and loan amount. Other terms and conditions may apply.

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