Mortgage Refinance Hacks 2026: So you’re a first-time refinancer and you’re not sure how to go about it. I’m going to share five refinance tips to get you ready to refi like a pro. Sometimes it doesn’t make sense to refinance your loan, especially if you have a low interest rate. We’re going to go over traditional refinances, cash-out refinances, and streamline refinances. I’m Shah Hill, getting you over the hill to home ownership and helping you refinance your first home.
What Refinancing Means
Before we get to the tips, let’s lay a foundation. Refinancing means paying off your mortgage with another mortgage that usually has different terms, hopefully more favorable. There may be instances when the terms are not more favorable, like during a divorce when the court orders a refinance. Often, you only want to refinance if you’re getting more favorable terms.
Change the Terms
The first tip is about the terms you can change. You can change the interest rate, which is the most common reason, going from a higher rate to a lower rate. You can also change the years of your loan, for example from a 30-year loan to a 15-year loan or a 20-year loan. You can change your loan type, such as refinancing from FHA loans to conventional or the other way around. You can also move from an adjustable rate to a fixed rate or from fixed to adjustable. A 5-year ARM may be refinanced to a 30-year fixed or 15-year fixed rate depending on your situation.
Who to Refinance With
The second tip is who you refinance with. You can refinance with your current lender, but you don’t have to. Always get three quotes to make sure you get the best rate and terms. You can quote with your current lender, an online lender, and credit unions. You can also reach out to your realtor for lender recommendations. During the pandemic, many people refinanced at very low rates, some as low as 2.5 percent, by connecting with the right lenders.
How to Apply
The third tip is how to apply. Your refinance application is similar to your original mortgage application, but easier because you already own the property. Lenders will check your credit and usually do an appraisal to confirm your home’s value. Government loans like USDA, FHA, and VA often allow a streamline refinance, which may skip the appraisal or credit check, making approval faster and simpler.
Cash-Out Refinances
The fourth tip is cash-out refinances. This allows you to refinance your mortgage and take some cash from your home equity. For example, if your home is worth $300,000 and you owe $200,000, you have $100,000 in equity. You could take out $40,000, refinance the total $240,000, and receive $40,000 cash. You want to make sure you can afford the new payment and make smart decisions with the cash, such as paying off high-interest debt or investing in something that generates income.
Closing Costs
The fifth tip is closing costs. Refinancing is not free. Most lenders will charge closing costs, and you may need to escrow taxes and insurance. You should get multiple quotes and understand the costs. Often, you can roll the closing costs into your loan, which was not always an option when buying your home. You can ask your lender if paying out of pocket lowers your interest rate.
Use a Refinancing Calculator
Use a refinancing calculator to see the cost associated and how much you might save. Keep in mind that refinancing may lengthen your loan term, for example going back to a 30-year loan after paying for five years. Look at a 15-year option if you want to lower your interest rate and pay off your mortgage early.