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Refinance

Conventional rate-and-term refinance

A conventional refinance replaces your existing mortgage with a new one, often to change the rate, the term, or both. Whether it's worth doing depends on total cost, expected time in the loan, and what you'd do with any monthly savings.

Who this may fit

Current homeowners considering a change in rate, term, or loan structure who want to make the decision on a total-cost basis rather than headline rate alone.

Key decision factors

  • Break-even period vs how long you'll keep the loan
  • Change in term (extending vs shortening)
  • Closing costs, including whether they're rolled into the loan
  • Whether PMI is added or removed by the refinance

Illustrative example

Common mistakes

  • Focusing only on monthly payment change
  • Ignoring the reset of the amortization schedule
  • Overlooking PMI implications of a new appraisal

Questions to ask a licensed loan officer

  • What is my break-even in months on this refinance?
  • How does the new term change my total interest paid?
  • Are there no-cost or lender-credit structures to compare?

Sources

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