In 2024, the mortgage refinancing market saw a surge as many homeowners looked to grab favorable interest rates, as per the FFIEC 2024 Modified LAR report. Forbes Advisor also states that refinancing for a lower rate can bring substantial savings. When considering mortgage refinance, you’ll face premium vs counterfeit models among lenders. Our guide reveals 3 top mortgage refinancing benefits, like up to 1% rate drop savings. With Best Price Guarantee and Free Installation Included, find local lenders now!

General information about mortgage refinance

Did you know that in 2024, the mortgage refinancing market witnessed significant activity, with many homeowners seeking to capitalize on favorable interest rates? According to a FFIEC 2024 Modified LAR report, a substantial number of borrowers explored refinancing options to improve their financial situations. This section will provide you with in – depth general information about mortgage refinance, including its benefits, the process of using a calculator, available loan products, and more.

Benefits of mortgage refinancing

Lower interest rate

One of the most common reasons to refinance a mortgage is to secure a lower interest rate. As per the rule of thumb, if you can lower the new loan’s interest rate by at least 1 percent, it might bring you considerable savings (Forbes Advisor). For example, if you have a $200,000 mortgage at an original interest rate of 4.5% and refinance to a 3.5% rate, you could save thousands of dollars over the life of the loan. Pro Tip: Use a mortgage refinance calculator to estimate your potential savings when considering a lower interest – rate refinance.

Change loan term

Refinancing also allows you to change your loan term. If you’ve been paying off your 30 – year mortgage for several years and want to pay it off faster, you can refinance to a 15 – year mortgage. While your monthly payments may increase, you’ll save on interest charges over the life of the loan. Conversely, if you’re struggling with high monthly payments, refinancing to a longer – term loan can lower your monthly outgo, freeing up budget for other expenses. A homeowner who had been paying a 30 – year mortgage for 10 years decided to refinance to a 15 – year mortgage. With the new shorter – term loan, they managed to save a significant amount on interest while still being able to afford the increased monthly payments.

Change loan type and lender

You might want to change your loan type from an adjustable – rate mortgage (ARM) to a fixed – rate mortgage to have more stable monthly payments. Or, if you’re not satisfied with your current lender, you can refinance and switch to a new one. For instance, government – backed loans like FHA, VA, and USDA loans have more flexible credit requirements than conventional mortgages. So, if you initially had a conventional mortgage but now have a lower credit score or want more lenient terms, you could refinance into a government – backed loan.

Process of using a mortgage refinance calculator

Using a mortgage refinance calculator is a straightforward step – by – step process:

1. Step – by – Step: Enter the details of your current mortgage, including the outstanding balance, interest rate, and remaining term.
2. Step – by – Step: Add the details of the new loan you’re considering, such as the new interest rate, loan term, and any closing costs.
3. Step – by – Step: The calculator will then provide you with an estimate of your new monthly payment, total interest savings over the life of the loan, and other relevant financial data.
   Try our mortgage refinance calculator to see how different loan scenarios can affect your finances. As recommended by leading mortgage industry tools, regularly using a calculator can help you make an informed decision about refinancing.

Refinance loan products

There are several types of refinance loan products available. Rate – and – term refinancing is the most common, which allows you to get a new interest rate or payment schedule. A cash – out refinance means taking out a larger new loan compared to your existing mortgage balance, allowing you to access the equity in your home. Another type is the Interest Rate Reduction Refinancing Loan (IRRRL), which is often used to refinance a VA – backed loan at a lower interest rate.

Refinance loan products for bad credit

If you have bad credit, there are still options available. Sage Home Loans is one of the top mortgage lenders that work with bad credit, mainly due to its competitive interest rates for home buyers with low credit scores or limited credit history. Government – backed loans such as FHA loans are also a good choice as they have more flexible credit requirements compared to conventional mortgages.

Current trends in mortgage interest rates and their impact on refinancing

After reaching a peak of 7.04% in January 2025, mortgage rates retreated to the mid – 6% range in March but have since been on the rise, closing in on 7% again (Forbes Advisor). When rates are low, more homeowners are likely to refinance to save on interest. However, other factors like fixed costs and borrower inattention can also impact refinancing decisions. Fixed costs primarily reduce refinancing for borrowers with small "rate gaps" (the difference between the coupon and current mortgage market rate).

Criteria for selecting the best mortgage refinance lenders

When selecting a mortgage refinance lender, consider the following:

• Interest rates: If you’re just looking for the lowest rate, shopping around to get multiple quotes can help you choose the right mortgage refinance for your needs.
• Loan types offered: Ensure the lender offers the type of loan you’re interested in, such as government – backed loans or fixed – rate mortgages.
• Customer service: Read reviews and testimonials to gauge the lender’s customer service quality.
  A comparison table of different lenders based on these criteria can be very helpful. Top – performing solutions include lenders that have a long – standing reputation, competitive rates, and a wide range of loan products.
  Key Takeaways:
• Mortgage refinancing offers benefits like lower interest rates, changing loan terms, and loan types.
• Use a mortgage refinance calculator to estimate savings and make informed decisions.
• There are various refinance loan products available, including those for borrowers with bad credit.
• Current mortgage interest rate trends influence refinancing decisions, but other factors also play a role.
• When choosing a lender, consider interest rates, loan types offered, and customer service.

FAQ

What is a cash – out refinance?

A cash – out refinance involves taking out a larger new loan than your existing mortgage balance. This lets you access the equity in your home. Unlike rate – and – term refinancing that mainly adjusts your rate or payment schedule, a cash – out refinance gives you cash. Detailed in our [Refinance loan products] analysis, it’s a popular option for homeowners needing extra funds.

How to choose the best mortgage refinance lender?

According to mortgage industry experts, when selecting a lender, consider multiple factors. First, compare interest rates by getting quotes from various lenders. Second, check the loan types they offer to ensure it aligns with your needs, like government – backed loans or fixed – rate mortgages. Third, read reviews for customer service quality. Detailed in our [Criteria for selecting the best mortgage refinance lenders] section.

Steps for using a mortgage refinance calculator?

Using a mortgage refinance calculator is simple. First, enter details of your current mortgage, such as outstanding balance, interest rate, and remaining term. Second, add details of the new loan, including new interest rate, term, and closing costs. Third, it will estimate new monthly payments and interest savings. As leading mortgage tools suggest, regular use aids informed decisions. Detailed in our [Process of using a mortgage refinance calculator] analysis.

Rate – and – term refinancing vs cash – out refinance: What’s the difference?

Rate – and – term refinancing focuses on getting a new interest rate or payment schedule, helping you save on interest or adjust monthly payments. On the other hand, a cash – out refinance allows you to take out a larger loan and access home equity. Unlike rate – and – term refinancing, it gives you cash. Detailed in our [Refinance loan products] section.