Mortgage Resource Guide
Home Equity and Refinancing
154 articles10 sections
Refinancing basics
- What Does It Mean to Refinance a Mortgage?Start here Refinancing replaces your mortgage with a new loan that pays off the old one, usually to cut your rate, change the term, or take cash out of your equity.
- How Do I Refinance My Mortgage? Set a goal, check your equity and credit, compare Loan Estimates from several lenders, lock a rate, clear underwriting, and review the Closing Disclosure before you sign.
Qualifying to refinance
- What Are the Requirements to Refinance a Mortgage? Lenders check your credit score, debt-to-income ratio, equity, and payment history. Conventional cash-out needs 20% equity left; no-cash-out loans need as little as 5%.
- What Credit Score Do You Need to Refinance a Mortgage? Manual conventional refinance minimums vary; FHA needs 500 to 580, and VA sets no minimum. Lower scores pay higher fees, especially on cash-out loans.
- Is Refinancing Available for FHA, VA, Jumbo, or USDA Loans? Yes. FHA and VA loans have streamlined and cash-out refinances, USDA has a streamlined-assist refinance with no cash out, and jumbo lenders set their own rules.
HELOC basics
- How Is My HELOC Rate Calculated? A HELOC rate is an index, usually the prime rate (7.00% on October 22, 2026), plus a lender margin. It moves with the index up to the maximum rate in your agreement.
- What Are the Requirements to Take Out a HELOC? You need equity within the lender's maximum combined loan-to-value plus credit and DTI that meet its limits. Your line is home value x max CLTV minus your mortgage.
- What Is a Home Equity Line of Credit (HELOC)? A HELOC is a revolving credit line secured by your home. You borrow and repay as needed during a draw period, then repay the balance, usually at a variable rate.
Choosing and using a HELOC
- Should I Choose a HELOC or a Home Equity Loan? Choose a home equity loan for one known expense you want on a fixed payment, and a HELOC for costs spread over months or years where only drawn money accrues interest.
- Should I Use a HELOC to Lower My Debt Payments? A HELOC can cut credit card interest by more than half, but it puts your home at risk, the interest is not deductible, and it saves money only if you stop new card debt.
- What Are the Drawbacks of a HELOC? A HELOC puts your home at risk, its variable payment can jump when the draw ends, and the lender can freeze the line if your home value drops. Fees can erase savings.
- What Are the Most Common Reasons to Use a HELOC? Home improvements, education, emergencies, debt payoff, and big purchases. Interest may be deductible for qualifying home improvements or education expenses.
Refinance costs and savings
- What Are the Costs and Fees of Refinancing? The median refinance had $7,329 in lender, third-party, and point charges in 2023, plus taxes, prepaid interest, and escrow. Title and lender fees can be cut.
- When Should I Refinance My Mortgage? Refinance when the new loan's benefits justify its costs. Compare payment savings, mortgage insurance, and the balance you will owe when you sell.
- Will Refinancing Lower My PMI? A refinance ends PMI if the new loan is 80% of your home's value or less. Conventional loans can often cancel PMI without one; FHA loans usually must refinance.
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