A new loan should fit your next chapter.

Start with what you want to change.

A refinance pays off your current mortgage with a new loan. You might be looking for a more manageable payment, a shorter payoff schedule or a fixed rate. A lower rate is useful only if the rest of the numbers fit your plans.

A rate-and-term refinance focuses on changing the loan rather than taking substantial cash from your equity. If you need money for a project or another expense, start with the cash-out guide.

Compare the loan you have with the loan you would get.

• Monthly payment. Compare principal and interest, mortgage insurance, and taxes and homeowners insurance separately. A different escrow estimate is not the same as mortgage savings.
• New balance and cash to close. Ask which costs you pay now and which get added to the loan.
• Time left to pay. Compare your remaining term with the new term. Starting a longer schedule can lower the payment while increasing total interest.
• Your likely timeline. Look at what you would pay and still owe when you expect to sell or pay off the loan.

Closing costs still count.

Ask for an itemized estimate of lender charges, points, appraisal when required, title and settlement fees, and recording charges. Prepaid interest and escrow deposits also affect the money needed at closing.

A “no-closing-cost” offer does not make the costs disappear. A lender credit may come with a higher rate, or costs may be financed into the balance. Compare the rate, payment and total balance under each option.

Use break-even as a first check.

For a straightforward payment-saving refinance, divide the refinance costs by the monthly savings. Then ask whether you expect to keep the loan long enough to recover those costs.

Use consistent payment components on both sides. A cash-out refinance needs a different comparison because you are also borrowing more money.

Bring your current loan into the conversation.

Start with your balance, interest rate, payment breakdown and remaining term, plus how long you expect to keep the home. Lance can help you compare keeping your loan with a possible refinance, including the costs and the payoff schedule.

For a formal comparison, review the Loan Estimate and ask about any rate lock, lender credits and items that may change. Keeping your current mortgage belongs in the comparison too.

Lance Morgan · NMLS #742281 · Seattle Wholesale Mortgage, powered by O C Home Loans Inc. Company NMLS #1842513. Please use Secure Upload for financial documents, not text or email.