Refinancing Your Mortgage: Questions Worth Asking

Refinancing replaces your existing mortgage with a new loan. Whether it makes sense depends on your goals, current loan, available terms and how long you expect to keep the home.

Be clear about your goal

You might want a different loan term, a more predictable payment or access to available equity. A lower payment alone does not necessarily mean a lower total borrowing cost.

Compare the full cost

Review closing costs and ask whether fees are paid upfront or added to the balance. Extending the repayment term may reduce a payment while increasing the interest paid over time.

Consider the break-even point

For a simple payment-saving comparison, divide the upfront refinancing costs by the estimated monthly savings. That gives an approximate number of months to recover those costs. This shortcut does not capture every difference, including changes to the loan balance, term, taxes or insurance.

Understand cash-out trade-offs

Cash-out refinancing uses home equity and increases the amount secured by your home. Consider the new payment, remaining equity and total cost carefully before using it to consolidate other debt.

Bring the right questions

• What are my total estimated closing costs?
• How does the new term compare with the time left on my current loan?
• Will mortgage insurance apply?
• What assumptions are used in the payment estimate?

A Legacy Lending Group loan officer can help you compare options. This article is general educational information, not a recommendation to refinance or a commitment to lend. Savings are not guaranteed.