Refinance Your Mortgage

Lower your rate, shorten your term, or restructure your loan. A refinance can save you money, build equity faster, or simply give you a payment that better fits your life right now.

When Does a Refinance Make Sense?

A refinance makes sense when the math works in your favor: the new rate is meaningfully lower than your current one and you plan to stay in the home past the break-even point, where monthly savings exceed closing costs. A rate-and-term refinance replaces your mortgage with a new one at a lower rate, a shorter term, or both. Unlike a cash-out refinance, the goal is to improve your existing loan terms rather than access equity.

If current rates are meaningfully lower than your existing rate, a refinance can reduce your monthly payment and save you significant interest over the life of the loan.

At Mortgage Austin, we help you run a break-even analysis so you know exactly how long it takes for the refinance savings to exceed the closing costs. We never recommend a refinance unless the numbers clearly support it.

Key facts:

  • Break-even point = total closing costs divided by monthly savings
  • Reaching 20% equity can let you refinance out of monthly mortgage insurance
  • Closing costs include appraisal, title work, and lender fees
  • Shortening from a 30-year to a 15- or 20-year term builds equity faster
  • A rate-and-term refinance improves your loan terms; a cash-out refinance accesses equity

Refinance Benefits

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Lower Your Rate

A lower interest rate reduces your monthly payment and the total interest you pay over the life of the loan. Even a small rate reduction can add up to significant savings.

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Shorten Your Term

Move from a 30-year to a 15-year or 20-year mortgage to build equity faster and pay off your home sooner.

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Drop Mortgage Insurance

If your home has appreciated and you have at least 20% equity, refinancing to a conventional loan can eliminate your monthly mortgage insurance payment.

Is a Refinance Right for You?

A refinance is right for you when the rate gap is large enough, the break-even point arrives before you plan to move, and the new loan matches your goal, whether that is a lower payment, a faster payoff, or removing mortgage insurance. Restarting a 30-year clock late in your current loan can offset the savings. Here are the factors we evaluate together:

Rate-and-term refinanceCash-out refinance
GoalImprove your rate, term, or bothConvert home equity to cash
New loan amountAbout your current balanceLarger than your current balance
Texas Section 50(a)(6) rulesDo not applyApply, including the 80% LTV cap

✓ Rate difference: How much lower is the new rate compared to your current one? A larger gap means bigger savings.

✓ Break-even point: How many months until the monthly savings exceed the closing costs? If you plan to stay in the home past that point, a refinance likely makes sense.

✓ Remaining term: How many years are left on your current mortgage? Restarting a 30-year clock when you are 10 years in may not always be beneficial.

✓ Closing costs: Refinances involve appraisal fees, title work, and lender fees. We lay these out clearly so there are no surprises.

✓ Your goals: Are you trying to lower your payment, pay off the home faster, or remove mortgage insurance? The answer shapes the recommendation.

We present the numbers transparently and help you decide if a refinance makes financial sense for your specific situation.

Frequently Asked Questions

When does it make sense to refinance my mortgage?
A refinance makes sense when you can lower your interest rate enough to offset closing costs within a reasonable timeframe, when you want to switch from an adjustable-rate to a fixed-rate mortgage, when you need to remove mortgage insurance, or when you want to access your home equity through a cash-out refinance. A general rule of thumb is that refinancing is worth considering if you can reduce your rate by at least 0.5% to 0.75%.
What is the difference between a rate-and-term refinance and a cash-out refinance?
A rate-and-term refinance replaces your existing mortgage with a new one at a different rate or term, without taking additional cash out. A cash-out refinance allows you to borrow more than your current balance and receive the difference in cash, which can be used for home improvements, debt consolidation, or other purposes.
How much does it cost to refinance?
Refinancing typically costs between 2% and 5% of the loan amount in closing costs, similar to a purchase mortgage. These costs include lender fees, appraisal, title insurance, and other settlement charges. Some lenders offer no-closing-cost refinance options where fees are rolled into the loan or offset by a slightly higher rate.
Can I refinance if I have an FHA loan?
Yes. FHA borrowers have access to the FHA Streamline Refinance, which is a simplified refinance program that requires minimal documentation and no appraisal. To qualify, you must have an existing FHA loan, be current on your payments, and demonstrate a net tangible benefit from refinancing (such as a lower payment).
How long do I have to wait before I can refinance?
The waiting period depends on your current loan type and the type of refinance you want. For most conventional refinances, there is no mandatory waiting period. FHA Streamline Refinances require at least 210 days from closing and six monthly payments. Cash-out refinances on conventional loans typically require you to have owned the home for at least six months.

Ready to Explore Refinancing?

No pressure, no obligation. Let us walk you through your options and find the right fit for your situation.

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