Two Types of Refinances
- Rate-and-term refinancing to save money. Typically, you refinance your remaining balance for a lower interest rate and a loan term you can afford. (The loan term is the number of years it will take to repay the loan.)
- Cash-out refinancing, in which you take out a new mortgage for more than what you owe. You take the difference in cash or you use it to pay off existing debt.
Other reasons people refinance: to replace an adjustable-rate mortgage with a fixed-rate loan, to settle a divorce or to eliminate FHA mortgage insurance. Check today’s low rates on a mortgage refinance. Check out if it’s cheaper to rent or buy in your state.