If your mortgage doesn’t fit your life the way it used to, you’re not stuck. A refinance replaces your current home loan with a new one, often on better terms, and it can open up several money-saving options. Many homeowners refinance to lower their interest rate, shorten or lengthen their loan term, turn their home equity into cash, switch loan types, or remove private mortgage insurance.
The right move depends on your finances, today’s rates, and your future goals. Currently, as many as 20% of homeowners could save money by refinancing. Making even one of the changes below could free up funds or help your mortgage better support the life you’re building now.
6 ways to get more out of your mortgage
When you’re looking for ways to cut costs, a refinance is one path worth considering. Here are at least six ways to use it:
1. Switch to a fixed rate
An adjustable-rate mortgage (ARM) starts with a lower rate, which allows for lower payments in the first few years of homeownership. But at some point, you may want a payment that stays the same every month instead of one that adjusts with the market.
Real-life scenario: A homeowner chose an ARM when they first bought their home because the lower starting rate fit their budget at the time of purchase. As the interest rate rose up for its first adjustment, they realized they’d rather lock in a fixed rate. Refinancing gave them the opportunity to change an adjustable- to a fixed-rate mortgage.
“Seriously could not be happier with my experience!” – Zach S.
Contact a loan officer near you.
2. Adjust your loan term
Life changes, and your mortgage can change with it. Maybe you signed up for a 30-year loan before a promotion boosted your income, and now you’d rather pay off your house faster. Or maybe you chose a 15-year term back when your household had two incomes, and now, those higher payments feel tight.
Real-life scenario: A couple refinanced from a 30-year to a 15-year loan after paying off their car and their student loans. Their payment went up a little, but they cut years of interest off their loan and will own their home outright well before retirement.
A couple in the opposite situation, adjusting to a single income after a job loss, refinanced from a 15-year to a 30-year term to lower their payment and breathe a little easier. Lengthening their term helped decrease their payment but did increase the total interest they paid over time. Their loan officer helped them weigh the pros and cons of the decision.
3. Tap into your home equity
After months or years of payments, you may have built up more equity than you realize. Your loan officer can walk you through when it makes sense to pull some of that equity out as cash, whether you want to renovate, cover education costs, consolidate debt, or handle another big expense.
Cash out refinances make up over a third of refinance transactions. Depending on your goals, a HELOC (home equity line of credit) or closed-end second mortgage may also be worth comparing.
Real-life scenario: Think of a homeowner whose kitchen hasn’t been updated since they bought the house. Using a cash-out refinance, they can fund their renovation without taking on a separate high-interest loan. Another homeowner might use that same equity to pay off credit card debt at a lower rate or put it toward starting a small business.
4. Lower your interest rate
If rates are lower now than when you first closed on your home, refinancing could save you money over the life of your loan. Dropping your rate by even a percentage point may save you several hundred dollars a month on your mortgage. Just keep in mind that your savings need to outweigh the closing costs and fees that come with any refinance.
Real-life scenario: A homeowner closed during a period of higher rates and kept an eye on the market. When rates finally dropped enough to make the math work, they refinanced and freed up monthly cash to start a college fund for their kids.
5. Drop your mortgage insurance
If you bought your home with a conventional loan and less than 20% down, you may be paying private mortgage insurance, or PMI. Once you’ve built enough equity, refinancing could help remove that cost and lower your monthly payment. If you’re not sure where your loan-to-value ratio stands, ask your loan officer to check.
Real-life scenario: A homeowner bought a house with a smaller down payment on a conventional loan. With time, regular payments, and rising home values, their loan-to-value ratio reached 80%, which meant they accrued at least 20% equity. At this point, they were able to refinance to remove PMI and lower their monthly mortgage payment.
6. Switch loan types
If you bought your home with an FHA loan, you’re likely paying mortgage insurance premiums for the life of the loan, no matter how much equity you build. Once you have enough equity, refinancing out of an FHA and into a conventional loan can drop that insurance for good.
Real-life scenario: A homeowner decided to use a first-time-buyer-friendly FHA loan to purchase their first home with a low down payment. Years later, their home had gained enough value that they had plenty of equity, but they were still paying FHA insurance every month with no end in sight. Refinancing into a conventional loan let them close that chapter and lower their monthly payment.
Want to stay up to date on savings?
If you’d like to trim the excess, look for savings opportunities, and potentially lower your rate: Reach out to your loan officer to schedule a mortgage review. A quick call or email is all it takes.
For educational purposes only. Sources are deemed reliable but not guaranteed.
While a mortgage refinance could make a significant difference in the amount you pay each month, there are other costs you should consider. Plus, your finance charges may be higher over the life of the loan.
You’re receiving this resource from your loan officer, who operates within the lending division of Cornerstone Capital Bank, a full-service financing institution.
Cornerstone Capital Bank is the parent organization that brings together multiple affiliated lending teams, providing shared resources, solutions, and long‑term support to help clients make confident financial decisions now and in the future.