Refinancing

Refinancing your mortgage can help you reduce monthly payments, access equity, or adjust the terms of your loan. But it comes with costs, so it’s important to weigh the pros and cons carefully. This section answers key questions about when and how to refinance.

Can You Refinance More Than Once?

Yes—many homeowners refinance multiple times, especially when interest rates drop. However, each refinance:

• Requires a new application and home appraisal
• May include closing costs and fees
• Could trigger a prepayment penalty if one exists in your current mortgage

Always evaluate whether the long-term savings outweigh the upfront costs before refinancing again.

How Does Refinancing Work?

Refinancing replaces your current mortgage with a new one—ideally at a lower rate or with better terms. Requirements often include:

• Adequate home equity
• Strong credit score
• Stable income

You can also borrow against your home equity for expenses like renovations, debt consolidation, or tuition. Just remember: refinancing often comes with full closing costs, so make sure the savings justify the expense.

Can You Refinance After Bankruptcy?

It’s possible but challenging. Post-bankruptcy refinancing typically comes with:

• Higher interest rates
• More lender scrutiny
• Limited loan options

If your mortgage is current and you’re considering bankruptcy, speak with your lender first. They may offer a refinance to help improve your financial situation.

When Is the Right Time to Refinance?

Refinancing makes the most sense when:

• Rates are at least 2% lower than your current loan
• You plan to stay in your home for 5+ years
• You’re early in your loan term and want to reduce interest paid over time

If you’re nearing the end of your loan or plan to sell soon, refinancing may not save you money. That said, no-cost refinancing options exist, where lenders cover closing costs—often in exchange for a slightly higher interest rate.

Should You Shop Around Before Refinancing?

Absolutely. Contact your current lender and compare offers from competitors. Be sure to ask about:

• Interest rate
• Points and fees
• Loan terms
• Prepayment penalties

The more you know, the better your refinance decision will be.