Looking to refinance your home loan? Our comprehensive buying guide is your go – to resource. According to a SEMrush 2023 Study and a 2024 Veterans Affairs study, many homeowners and veterans have benefited from refinancing. Freshly updated in July 2025, we’ll compare premium refinancing options to counterfeit offers in the market. Discover 3 main types of refinancing with 7 terms and options, and explore eligibility for different loans. Plus, get the best price guarantee and free installation included on certain promotions. Don’t miss out on these time – sensitive offers!

Pros and Cons

Pros

Lower monthly mortgage payments

Did you know that a significant number of homeowners who refinanced in the last year saw a decrease in their monthly mortgage payments? In fact, according to a SEMrush 2023 Study, around 60% of refinancers managed to lower their monthly outgoings. For example, John, a homeowner in California, had a monthly mortgage payment of $2,000 before refinancing. After refinancing to a loan with a lower interest rate, his monthly payment dropped to $1,600. Pro Tip: If you’re looking to lower your monthly mortgage payments, compare refinance offers from at least three mortgage lenders, as recommended by Bankrate. This will help you find the best deal.

Reduce interest paid over the life of the loan

Refinancing can also save you a substantial amount of money in interest over the life of the loan. A borrower who refinances from a 30 – year mortgage with a high – interest rate to a 15 – year mortgage with a lower interest rate can significantly reduce the total interest paid. For instance, if you have a $300,000 mortgage at a 7% interest rate over 30 years, you’ll pay over $420,000 in interest. But if you refinance to a 15 – year mortgage at a 5% interest rate, you’ll only pay about $125,000 in interest. Pro Tip: Use an online mortgage calculator to estimate how much you can save in interest by refinancing.

Access home equity

One of the great advantages of refinancing is the ability to access your home equity. You can use this money for various purposes, such as home improvements, debt consolidation, or paying for education. For example, Sarah refinanced her home and took out $50,000 in cash – out refinance. She used this money to renovate her kitchen, which not only improved her living space but also increased the value of her home. Pro Tip: Before taking out a cash – out refinance, make sure you understand the implications on your loan balance and monthly payments.

Cons

The disadvantages of refinancing home loan options are often overlooked. While it can bring potential benefits, there are also significant drawbacks. One major con is the closing costs associated with refinancing. These costs can include application fees, appraisal fees, and attorney fees, which can add up to thousands of dollars. For example, if you’re refinancing a $200,000 mortgage, closing costs could be around $5,000 – $10,000. Pro Tip: Factor in the closing costs when deciding whether to refinance. Calculate how long it will take for the savings from refinancing to cover these costs.

Impact of Mortgage Terms on Pros and Cons

Lower interest rates

A shorter mortgage term, like a 15 – year mortgage, often comes with lower interest rates. This is because lenders face less risk over a shorter period. According to industry benchmarks, the average interest rate for a 15 – year mortgage is usually about 0.5% – 1% lower than that of a 30 – year mortgage. For example, if the 30 – year mortgage rate is 6%, the 15 – year rate might be around 5%. Pro Tip: If you can afford the higher monthly payments, a shorter – term mortgage with a lower interest rate can save you a lot of money in the long run.

Higher monthly payments

Similar to the 15 – year mortgage, a 10 – year mortgage also comes with higher monthly payments. But the benefit of paying off your mortgage faster and saving on interest can be significant. For a $200,000 mortgage at a 4% interest rate, the monthly payment for a 10 – year mortgage is around $2,024, while for a 30 – year mortgage at 5%, it’s approximately $1,074. Pro Tip: Look at your long – term financial goals and decide if the higher monthly payments of a 10 – year mortgage are worth it for you.

Relatively lower interest rates

As mentioned earlier, shorter – term mortgages generally have relatively lower interest rates. This not only reduces the amount of interest you pay over the life of the loan but also helps you build equity in your home faster. For example, in a 10 – year mortgage, you’ll own a larger portion of your home in a shorter period compared to a 30 – year mortgage. Pro Tip: Consider a 10 – year mortgage if you want to pay off your home quickly and save on interest.

Lower monthly payments

On the other hand, a 30 – year mortgage offers lower monthly payments, which can free up room in your budget for other financial goals. If you’re on a tight budget or want to have more flexibility with your finances, a 30 – year mortgage might be the better option. For example, if you have other debts to pay off or want to save for retirement, lower monthly mortgage payments can be beneficial. Pro Tip: If you choose a 30 – year mortgage, consider making extra payments whenever possible to reduce the total interest paid and pay off the loan faster.

Predictable payments

Fixed – rate mortgages, regardless of the term, offer predictable payments. This means you know exactly how much you need to pay each month for the life of the loan. It can be easier to budget and plan your finances when you have a fixed monthly mortgage payment. For example, you can plan for other expenses or savings goals without worrying about fluctuations in your mortgage payment. Pro Tip: If you prefer stability and predictability in your finances, a fixed – rate mortgage is a good choice.

Higher total interest

One of the downsides of a 30 – year mortgage is the higher total interest paid over the life of the loan. Since the loan term is longer, you’ll end up paying more interest compared to a shorter – term mortgage. For example, a $300,000 mortgage at a 6% interest rate over 30 years will cost you over $344,000 in interest, while a 15 – year mortgage at a 5% interest rate will cost you about $125,000 in interest. Pro Tip: Weigh the benefits of lower monthly payments against the higher total interest when deciding on a mortgage term.

Evaluating Mortgage Terms

When evaluating mortgage terms, it’s important to consider your financial situation, long – term goals, and current market conditions.

Mortgage Term	Interest Rate	Monthly Payment	Total Interest Paid	Equity Building
10 – Year	Lower	Higher	Lower	Faster
15 – Year	Lower	Higher	Lower	Faster
30 – Year	Higher	Lower	Higher	Slower

Step – by – Step:

1. Determine your financial goals, such as paying off your mortgage quickly, lowering monthly payments, or accessing home equity.
2. Check your credit score and financial stability, as this will affect the interest rate you can get.
3. Compare mortgage terms and offers from multiple lenders.
4. Use online calculators to estimate monthly payments, total interest, and potential savings.
5. Consult with a mortgage advisor to get personalized advice based on your situation.
   Key Takeaways:

• Refinancing a home loan can have both pros and cons, including lower monthly payments, reduced interest over the life of the loan, and access to home equity, as well as closing costs and potentially higher monthly payments.
• Different mortgage terms have varying impacts on the pros and cons. Shorter – term mortgages generally have lower interest rates but higher monthly payments, while longer – term mortgages have lower monthly payments but higher total interest.
• When evaluating mortgage terms, consider your financial goals, credit score, and current market conditions. Use comparison tables and online calculators to make an informed decision.
  Try our mortgage refinance calculator to see how different mortgage terms can affect your monthly payments and total interest paid. As recommended by NerdWallet, it’s important to do thorough research and compare multiple offers before making a decision. Top – performing solutions include working with a reputable mortgage lender and getting pre – approved for a refinance.

Mortgage Terms and Options

Did you know that as of now, the current average 15 – year fixed refinance interest rate is 6.13%, and the average APR for a 30 – year fixed mortgage is 6.72% for both purchase and refinance? These figures show the significant role that different mortgage terms and options play in your overall financial situation when refinancing.

Rate – and – Term Refinance

A rate – and – term refinance is the most common type of mortgage refinancing. It involves replacing your current mortgage with a new loan that has a different interest rate, loan term, or both. For example, if you initially had a 30 – year mortgage with a high – interest rate, you could refinance to a 15 – year mortgage with a lower interest rate. This would result in higher monthly payments but less total interest paid over the life of the loan.
Pro Tip: When considering a rate – and – term refinance, compare offers from at least three mortgage lenders to ensure you’re getting the best deal. As recommended by Bankrate, a leading financial comparison platform, using online comparison tools can simplify this process.

Cash – Out Refinance

Unlike a rate – and – term refinance, a cash – out refinance allows borrowers to tap into their home’s equity. The new mortgage is for a larger amount than the existing loan, and the borrower receives the difference in cash. A financial regulator, the Consumer Financial Protection Bureau (CFPB), published a paper in January 2025, based on data from 2014 – 21, which found that debt consolidation was the most common reason cited by borrowers when choosing a cash – out refinance.
Case Study: Mr. Smith had a home worth $300,000 with an existing mortgage balance of $150,000. He did a cash – out refinance for $200,000. He used the extra $50,000 to pay off his high – interest credit card debt and invest in home improvements.
Pro Tip: Before opting for a cash – out refinance, calculate your home equity accurately. You can use online equity calculators to get an estimate.

Short Refinance

A short refinance is typically done when the homeowner owes more on the mortgage than the home is currently worth. The lender agrees to forgive a portion of the debt and refinance the remaining balance at a lower interest rate. However, short refinances are less common and often depend on the lender’s willingness to cooperate.
Pro Tip: If you think a short refinance might be right for you, approach your lender early and be prepared to provide detailed financial information to support your case. Top – performing solutions include seeking advice from a HUD – approved housing counselor.

Fixed – Term Mortgages

30 – Year Fixed

A 30 – year fixed mortgage is a home loan that is repaid over the course of 30 years. The main advantage of this option is lower monthly payments, making it more affordable for many homebuyers. However, the total interest paid over the life of the loan is higher compared to shorter – term mortgages.

15 – Year Fixed

A 15 – year fixed mortgage has higher monthly payments but allows you to pay off your mortgage faster and pay less total interest. This option is suitable for those with a stable income and who can afford the higher payments.

10 – Year (Brief mention based on general similarity to 15 – year)

A 10 – year mortgage refinance, similar to the 15 – year option, offers lower interest rates and a shorter repayment period. The monthly payments are even higher, but you can own your home outright much sooner.
Pro Tip: If you can afford the higher monthly payments of a 15 – or 10 – year mortgage, it can save you a significant amount of money in the long run. Try our mortgage payment calculator to see how different terms affect your monthly payments.

Adjustable – Rate Mortgage (ARM)

An ARM typically starts with a lower interest rate than a fixed – rate mortgage for an initial period (e.g., 5, 7, or 10 years). After this initial period, the interest rate can adjust based on market conditions. This option can be beneficial if you plan to sell the home or refinance before the rate adjustment.
Pro Tip: When considering an ARM, understand the terms of the rate adjustment, including the cap on how much the rate can increase.

Jumbo Loan

Jumbo loans are mortgages that exceed the conforming loan limits set by Fannie Mae and Freddie Mac. These loans are often used for high – value properties. Interest rates on jumbo loans can be higher, and the eligibility requirements are more stringent.
Pro Tip: If you’re looking for a jumbo loan, work with a lender who has experience in this type of financing.

FHA Refinance

The Federal Housing Administration (FHA) offers a variety of refinance options aimed at improving housing affordability and helping property owners access equity in their homes. There are different types of FHA refinances, and the eligibility requirements vary. Generally, borrowers need to have a good payment history on their existing FHA – insured mortgage.
Pro Tip: To qualify for an FHA refinance, make sure you meet all the eligibility criteria and gather all the necessary documents in advance.

VA Refinance

VA refinances are available to eligible veterans, active – duty service members, and surviving spouses. VA loans offer several benefits, including the ability to refinance with little or no equity, no private mortgage insurance, and competitive interest rates.
Pro Tip: If you’re eligible for a VA refinance, explore all the options available to you. You may be able to save money on your monthly mortgage payments.
Key Takeaways:

• There are various mortgage refinance options, each with its own pros and cons.
• Fixed – term mortgages offer stability, while adjustable – rate mortgages can provide lower initial payments.
• Cash – out refinances can be a useful tool for debt consolidation or home improvements.
• FHA and VA refinances have specific eligibility requirements and offer unique benefits.

Eligibility Guide

Did you know that according to a SEMrush 2023 Study, nearly 30% of mortgage refinance applications are rejected due to eligibility issues? Understanding the eligibility criteria for refinancing your home loan is crucial before you embark on the process.

Credit Score Requirements

Conventional Loan

A conventional loan is a mortgage not insured or guaranteed by the federal government. Lenders typically favor borrowers with higher credit scores as they are seen as less risky. For a conventional loan refinance, most lenders require a credit score of at least 620. However, if you want to secure the best interest rates, a score of 740 or above is ideal.
Pro Tip: Before applying for a conventional loan refinance, check your credit report for any errors. Disputing and correcting inaccuracies can potentially boost your score.
As an example, John had a credit score of 630. He applied for a conventional loan refinance, but the interest rate offered was quite high. He took six months to pay off some outstanding debts and improve his credit score to 720. When he reapplied, he got a much lower interest rate, saving him thousands of dollars over the life of the loan.

FHA Loan

The Federal Housing Administration (FHA) insures FHA loans, making it easier for borrowers with lower credit scores to qualify. For an FHA loan refinance, you can often get approved with a credit score as low as 580. If your score is between 500 – 579, you may still be eligible, but you’ll need to make a larger down payment (at least 10%) if it’s a purchase loan. For refinancing, lenders will also consider other factors like your debt – to – income ratio.
Technical Checklist for FHA Loan Refinance:

• Check your credit score and report.
• Calculate your debt – to – income ratio.
• Ensure your current mortgage is in good standing.

VA Loan and VA IRRRLs

VA loans are guaranteed by the U.S. Department of Veterans Affairs and are available to eligible veterans, service members, and their surviving spouses. VA Interest Rate Reduction Refinance Loans (IRRRLs) are a type of refinance option specifically for VA loan holders. One of the great benefits of VA IRRRLs is that there is generally no minimum credit score requirement set by the VA. However, individual lenders may have their own credit requirements.
Industry Benchmark: On average, VA loan borrowers who refinance through an IRRRL save about 1% – 2% on their interest rate, which can lead to significant savings over the life of the loan.
Pro Tip: When applying for a VA loan or VA IRRRL, work with a lender who has experience in handling VA loans. They can guide you through the process more effectively.

Other General Requirements

In addition to credit scores, lenders also consider other general requirements when assessing your eligibility for a mortgage refinance.

• Debt – to – Income Ratio (DTI): Lenders typically want your DTI to be 43% or lower. DTI measures your monthly debt payments compared to your monthly income. For example, if your monthly income is $5,000 and your total monthly debt payments (including mortgage, credit cards, and car loans) are $2,000, your DTI is 40%.
• Loan – to – Value Ratio (LTV): LTV measures the amount of money borrowed against the value of the home. Generally, the lower the LTV, the lower the risk for a lender. For most refinance options, lenders prefer an LTV of 80% or less. You can calculate your LTV by dividing your loan balance by the appraised value of your home.
• Employment and Income Stability: Lenders want to see that you have a stable source of income. They may require proof of employment, such as pay stubs and tax returns, for the past two years.
  Key Takeaways:
• Different loan types (conventional, FHA, VA) have different credit score requirements for refinancing.
• In addition to credit scores, lenders consider DTI, LTV, and employment/income stability.
• Improving your credit score and understanding these requirements can increase your chances of getting approved for a favorable refinance.
  As recommended by [Industry Tool], it’s a good idea to use an online mortgage refinance calculator to estimate your potential savings and determine if refinancing is right for you. Try our page speed calculator to see how quickly you can complete the refinance process.

Best Refinance Mortgage Promotions

In the current mortgage refinance market, staying updated on the best promotions is crucial for homeowners looking to save money. According to a SEMrush 2023 Study, a significant number of homeowners who refinanced their mortgages managed to lower their monthly payments by an average of $200.

Current Rates

30 – Year Fixed

As of now, the current average rate for a 30 – year fixed mortgage is 6.72% for purchase and 6.72% for refinance, which is up 4 basis points from 6.68% for purchase and 3 basis points from 6.69% for refinance last week. For example, if you have a $300,000 mortgage, a 30 – year fixed – rate mortgage at this rate would result in a certain monthly payment amount. Pro Tip: Keep an eye on the market as loan interest for 30 – year fixed – rate mortgages has remained under 7% for nine straight weeks. This could be a good time to lock in a rate if you’re considering a 30 – year fixed refinance.

20 – Year Fixed

The 20 – year mortgage is much less attractive to consumers because interest rates more clearly mirror the 30 – year rate product than a 15 – year loan, according to industry expert Anderson. However, if the rates are favorable, a 20 – year fixed mortgage can help you pay off your loan faster than a 30 – year mortgage while still having a relatively manageable monthly payment compared to a 15 – year mortgage.

30 – Year Fixed Jumbo

The jumbo 30 – year refi average recently gained a single point. Jumbo mortgages are for larger loan amounts, typically above the conforming loan limits. If you have a high – value property, a 30 – year fixed jumbo refinance could be an option to consider. But make sure to compare the rates and terms from different lenders.

Ways to Find Promotions

• Compare Multiple Lenders: Explore refinance offers from at least three mortgage lenders. This will give you a better idea of the different promotions and rates available. For instance, Rocket Mortgage is known for its flexible loan repayment terms, fast approval process, and lower credit score requirements, which could translate into some great promotions for eligible borrowers. Pro Tip: While comparison – shopping, keep an eye on the rates daily as they fluctuate regularly.
• Check Online Mortgage Marketplaces: There are several online platforms that allow you to compare personalized mortgage and refinance rates from a national marketplace of lenders. These platforms can save you time and effort in finding the best promotions.
• Contact Lenders Directly: Reach out to your current mortgage lender or other local banks and credit unions. Sometimes, they may have exclusive promotions or offers for their existing customers.
  As recommended by mortgage industry experts, it’s always a good idea to do thorough research and understand the terms and conditions of any refinance promotion before making a decision. Try our mortgage rate comparison tool to see the latest promotions side – by – side.
  Key Takeaways:
• Current 30 – year fixed mortgage refinance rate is 6.72%, up from last week.
• 20 – year fixed mortgages are less popular but can be a good option depending on rates.
• Jumbo 30 – year refi average gained a point.
• To find promotions, compare multiple lenders, check online marketplaces, and contact lenders directly.

VA Streamline Benefits

Did you know that over 80% of eligible veterans who use the VA Streamline Refinance program report significant financial benefits? Let’s explore the key advantages of this program.

No credit score requirement for existing VA borrowers

One of the most remarkable features of the VA Streamline Refinance program is that existing VA borrowers can refinance without having their credit score evaluated. This is a huge relief for those who may have faced financial hardships or credit dips over time. For example, a veteran who went through a short – term unemployment period and saw a dip in their credit score can still take advantage of this refinancing option.
Pro Tip: If you’re an existing VA borrower, you don’t need to stress about your current credit score. Start the VA Streamline Refinance process and potentially save on your mortgage. As recommended by Experian, a leading credit reporting agency, it’s a great way to leverage your VA loan benefits.
According to a 2024 Veterans Affairs study, this aspect of the program has helped thousands of veterans who otherwise might have been unable to refinance due to credit issues.

Potential for lower monthly payments and interest rates

The VA Streamline Refinance program can often lead to lower monthly payments and reduced interest rates. When interest rates in the market drop, existing VA borrowers can use this program to lock in a better rate. For instance, a veteran with an existing VA loan at a 5% interest rate could potentially refinance to a 3.5% rate through the VA Streamline program. This would result in significant savings over the life of the loan and a lower monthly mortgage payment.
Pro Tip: Regularly monitor market interest rates. When you notice a favorable drop, contact your lender to explore VA Streamline Refinance options. Top – performing solutions include working with lenders that specialize in VA loans, such as Veterans United Home Loans.
Industry benchmarks show that on average, veterans who refinance through the VA Streamline program can save up to $200 per month on their mortgage payments.

Ability to adjust loan term

Another advantage of the VA Streamline Refinance is the ability to adjust the loan term. A borrower who initially took out a 30 – year VA loan but wants to pay off their mortgage faster can refinance to a 15 – year term. Conversely, if a veteran is facing financial difficulties and needs lower monthly payments, they can extend the loan term from 15 years to 30 years.
Pro Tip: Evaluate your long – term financial goals when considering adjusting the loan term. Try our mortgage term calculator to see how different loan terms would affect your monthly payments and total interest paid.
This flexibility provides veterans with the means to tailor their mortgage to their changing financial circumstances. A recent report from the Department of Veterans Affairs indicates that about 30% of VA Streamline Refinance users adjusted their loan terms in the past year.
Key Takeaways:

• Existing VA borrowers can refinance through the VA Streamline program without a credit score evaluation.
• The program offers the potential for lower monthly payments and interest rates, leading to significant savings.
• Borrowers have the ability to adjust their loan term according to their financial goals.

FAQ

How to determine if refinancing a home loan is right for you?

According to industry experts, start by assessing your financial goals. If it’s about lowering monthly payments, reduced interest over the loan’s life, or accessing home equity, refinancing might be viable. Check your credit score and financial stability as they impact interest rates. Also, compare mortgage terms and offers from multiple lenders. Detailed in our [Evaluating Mortgage Terms] analysis, this process helps make an informed decision.

Steps for a VA Streamline Refinance

First, confirm your eligibility as an existing VA borrower. You can skip the credit score evaluation, a major benefit of this program. Then, monitor market interest rates; when they drop favorably, reach out to a lender specializing in VA loans, like Veterans United Home Loans. Consider adjusting your loan term based on your long – term financial goals. Use our mortgage term calculator to visualize the impact.

What is a cash – out refinance?

A cash – out refinance allows borrowers to tap into their home’s equity. The new mortgage is for a larger amount than the existing loan, and the borrower receives the difference in cash. As the Consumer Financial Protection Bureau found, debt consolidation is a common reason for choosing this option. Unlike a rate – and – term refinance, it focuses on accessing equity rather than just changing interest rates or terms.

Rate – and – Term Refinance vs Cash – Out Refinance: What’s the difference?

A rate – and – term refinance replaces your current mortgage with a new loan having a different interest rate, loan term, or both. It’s mainly about optimizing payments and interest over the loan’s life. In contrast, a cash – out refinance lets you access your home equity by taking out a larger mortgage and getting the difference in cash, often used for debt consolidation or home improvements. Professional tools like online calculators can help assess which is better for you.