Six Reasons to Refinance Your Home Loan

When most people hear the word refinance, they immediately think it means one thing: lowering their interest rate to lower their monthly payment. While that’s the most popular reason people refinance, it’s not the only one. Think of refinancing as a financial tool. Depending on what’s happening in your life, your budget, and your long-term goals, it can help you unlock flexibility, reduce risk, or restructure your loan to better fit your needs today. Below are six of the most common reasons homeowners refinance, including a few that may surprise you, plus some quick guidance on what type of refinance might apply. 1) Lower your interest rate and monthly payment This is the most popular reason why homeowners refinance, and for good reason. If current mortgage interest rates are meaningfully lower than your existing rate, refinancing can help you reduce your payment and improve your monthly cash flow. A rate-and-term refinance is typically the option used here. It replaces your current mortgage with a new one that has a different rate and/or term, often to achieve a lower payment, a more stable structure, or both. When this can make sense: You want to reduce your monthly payment Your credit score or income is stronger than when you originally financed You want to move from an adjustable-rate mortgage to a fixed-rate mortgage for stability 2) Access your home equity for big goals Home equity isn’t just a number on paper; it can be a powerful resource to help you achieve your financial goals. A cash-out refinance allows you to replace your current mortgage with a new, larger loan and take the difference in cash. Homeowners commonly use equity to fund: Home renovations Major life expenses (weddings, tuition, medical costs) Emergency reserves Investments in long-term plans Quick example: If a new appraisal says your home is worth $450,000 and your current mortgage balance is $300,000, you have $150,000 in equity. A cash-out refinance could allow you to access a portion of that equity (depending on loan guidelines) while keeping the rest invested in your home. If you’d like to access some equity but aren’t ready to replace your entire mortgage, a HELOC (Home Equity Line of Credit) can be a strong alternative. It works like a credit card, using your home equity as a revolving line of credit that you can borrow against and pay off as needed. 3) Consolidate high-interest debt into one payment This is one of the most overlooked refinance strategies, especially given that credit card interest rates are 20% or higher. If you’re carrying high-interest debt, consolidating it through a refinance can potentially: Simplify your monthly finances (one payment instead of several) Reduce the amount of interest you’re paying over time Improve monthly cash flow This is often done through a cash-out refinance, where the cash is used to pay off higher-interest balances. Important note: Debt consolidation isn’t “free money,” it’s about restructuring your existing debts. The goal is to lower total costs and improve monthly stability by using your equity to pay off higher-interest debt, such as credit cards with APRs above 20%. A smart plan matters here, and a quick scenario review can help you see whether it makes sense for your financial situation. 4) Remove PMI once you’ve built enough equity If you bought your home with less than 20% down using a conventional loan, you’re required to pay private mortgage insurance (PMI). PMI is typically between 0.5%-1.5% of the original loan amount, paid monthly. But many homeowners don’t realize PMI isn’t always permanent. If your home’s value has appreciated and/or you’ve paid down your loan balance, you may now have enough equity to remove PMI, which can reduce your monthly payment without changing your lifestyle at all. Let’s say you bought your home for $320,000 and put 5% down. A few years later, your home value rises to $375,000, and your loan balance drops. If you now have 20% equity or more, you can remove your PMI. In some cases, a refinance is the cleanest path, especially if it also improves your rate or loan structure. 5) Change your loan term to match your goals Refinancing isn’t always about paying less each month. Sometimes it’s about aligning your mortgage with your priorities. With a rate-and-term refinance, you may be able to: Shorten your term (like moving from a 30-year to a 15-year) to build equity faster and pay off your home sooner Extend your term (like resetting to a new 30-year) to create more monthly flexibility Why homeowners do this: You want to pay the home off before retirement You want a lower payment to free up cash for other goals You want stability and predictability in your budget There isn’t a single answer to this kind of refinance. How you restructure your loan terms depends on your timeline, your cash flow, and what you want your money to do for you. 6) Change the borrowers listed on the mortgage after a life change This is a reason for refinancing that people don’t think about until they need it. If you’ve had a major life change, you may want to adjust who is legally responsible for the mortgage or who is included on the loan. Common situations include: Marriage (adding a spouse) Divorce (removing a borrower) Ownership restructure (estate planning, family transitions, or agreement changes) For example, if one borrower is keeping the home after a divorce, they may refinance into a new loan in their name only. This can help create a clear financial separation and ensure the mortgage aligns with the new ownership structure. This is the kind of refinance that benefits from a guided review, because the right path for you depends on your credit, income, equity, and the timing of the ownership change. Refinance options you may hear about Depending on your current loan type and your goals, your refinance might fall into one of these categories. Follow the links below to learn more about each type of refinance, the qualification requirements, and more. Rate-and-term refinance: Change your rate and/or term (often to lower payment or adjust loan structure) Cash-out refinance: Access a portion of your equity in cash VA IRRRL (Interest Rate Reduction Refinance Loan): A streamlined option for eligible VA homeowners looking to refinance an existing VA loan FHA Streamline Refinance: A streamlined option for eligible FHA homeowners refinancing an existing FHA loan Not every option fits every homeowner, but most homeowners do have at least one path worth exploring. If you want to see what your options look like and get an expert’s opinion on the best path forward, fill out this form to connect with a UMortgage Loan Originator near you. If the time isn’t right for you right now, they’ll set a strike rate and make sure you’re ready to act fast when rates dip below a certain level. FAQs: Common refinance questions homeowners ask Does refinancing only make sense if rates are lower than my current rate? Not always. Lowering your rate is common, but refinancing can also be about removing PMI, changing your term, consolidating debt, accessing equity, or handling a life change. How do I know if refinancing is “worth it”? A simple way to think about it is: what problem does this solve, and how much does it cost to solve it? A refinance review should include a clear breakdown of the monthly payment difference, the costs involved, and how long it takes to break even (if applicable). Will refinancing reset my loan back to 30 years? It can, but it doesn’t have to. You can choose different term lengths depending on your goals (and, in many cases, structure it so you’re not “starting over” in a way that doesn’t serve you). What credit score do I need to refinance? It depends on the loan type and your overall profile. The best way to find out is to have a UMortgage Loan Originator pull some loan scenarios, because credit is only one piece of the picture. Is a cash-out refinance the same as a HELOC? No. A cash-out refinance replaces your mortgage with a new loan. A HELOC is a separate line of credit that sits alongside your existing mortgage. One isn’t better than the other, but there are situations where one would make more sense than the other. How long does a refinance take? Timing varies based on the type of refinance you want, the property you’re refinancing, required documentation, and more. If refinancing could improve your financial picture, it’s worth at least reviewing your options. Ready to see your options? Click here to get started.

If you’re like many homeowners holding off on refinancing because you don’t want to lose your low mortgage rate, it might be time to look at the bigger picture. Yes, rates aren’t what they were a few years ago. However, credit card debt is at record highs, with average interest rates north of 20%. For households juggling thousands in revolving debt, it’s not the mortgage rate that’s crushing monthly cash flow; it’s those high-interest minimum payments. If you’re feeling financially squeezed, loan products like a cash-out refinance or home equity line of credit (HELOC) can help you take control by using your home’s equity to consolidate debt and reclaim hundreds, sometimes thousands, in monthly breathing room. Brian Cardenas, UMortgage Loan Originator, has been using these strategies to save his clients hundreds of dollars per month. “Money is one of the biggest stressors that we experience in our lives,” said Cardenas. “People are sitting on a ton of equity and a really low interest rate on their home. But they also have this albatross around their neck of this high-interest debt that’s just crushing them.” According to the Federal Reserve Bank of New York, total outstanding credit card debt stood at approximately $1.21 trillion by the end of Q4 2024 – a $45 billion increase from the prior quarter, marking a 7.3% year-over-year rise. At an average APR of 21.37%, as reported by the Federal Reserve in February 2025, that extra debt adds up fast. With a cash-out refi or HELOC, you’re using the money you’ve already invested in your home instead of taking on more debt with high-interest credit cards or personal loans. Here’s how each works, so you know your options before you commit. What is a Cash Out Refinance and How Does One Work? A cash-out refinance allows homeowners to replace their current mortgage with a new loan that provides extra funds by tapping into the equity homeowners have built in their property. Essentially, homeowners can "cash out" a portion of their equity to use as they see fit. This process works by allowing homeowners to borrow against their home equity, which is the difference between the home’s appraised market value and the remaining mortgage balance. By taking out a larger loan, the borrower receives the excess in cash after paying off the original mortgage. For a clearer picture of how this can work, use UMortgage’s Refinance Calculator to see what a cash-out refi might look like for you. See our Cash-Out Refinance loan product page to learn more. What is a HELOC Loan and How Does One Work? A Home Equity Line of Credit (HELOC) is a loan that lets you borrow against your home’s equity without replacing your existing mortgage. Think of it like a credit card that can be used, repaid, and used again over time. This flexible borrowing option is based on the difference between the home’s current market value and the outstanding mortgage balance. Homeowners can draw from the line of credit as needed, whether for home improvements, debt consolidation, or other significant expenses, and only pay interest on the amount they use. See our HELOC loan product page to learn more. Why You Should Consult with an Expert Before You Act Accessing your equity is just like any other mortgage product: there’s no one-size-fits-all option. That’s why it’s so important to consult with a mortgage expert before you pull the trigger. Working with a UMortgage Loan Originator takes out the guesswork; you’ll have someone in your corner who will present you with all your options so you can make an informed decision that works best for your financial future. “After crunching all the numbers, I found out that there were some considerable savings that we can present to this borrower and help relieve some of the financial burdens that they’re experiencing every single month,” said Cardenas regarding a client whose debt he consolidated earlier this year. “We’re just simply presenting options and letting the consumer decide which, if any of these options, is going to fit their needs best.” If you want to discover your options to consolidate your debt with your home’s equity, or learn more about HELOC rates, fill out this form to connect with a UMortgage Loan Originator in your area. They’ll reach out shortly after you submit to start the process.

The holiday season is approaching, and for many, this time of year can put families under financial strain. Between gifts, travel, and festive gatherings, the expenses can quickly add up, leaving some feeling stretched thin. For homeowners, a cash-out refinance can be an effective way to access home equity, providing extra funds to cover holiday costs without relying on high-interest credit cards or personal loans. By using the equity they've built, homeowners can enjoy a more relaxed and financially stable holiday season. What is a Cash-Out Refinance and How Does One Work? A cash-out refinance allows homeowners to replace their current mortgage with a new loan that provides extra funds by tapping into the equity homeowners have built in their property. Essentially, homeowners can "cash out" a portion of their equity to use however they like—whether it’s to pay off high-interest debt, fund renovations, or, in this case, cover holiday expenses. This process works by allowing homeowners to borrow against their home equity, which is the difference between the home’s appraised market value and the remaining mortgage balance. By taking out a larger loan, the borrower receives the excess in cash after paying off the original mortgage. For a clearer picture of how this can work, use UMortgage’s Refinance Calculator to see what a cash-out refi might look like for you. For a more in-depth quote, fill out this form to connect with a UMortgage Loan Originator or reach out to your existing UMortgage partner. Home equity is a valuable asset that accumulates over time as mortgage payments are made and property values appreciate. With a cash-out refinance, homeowners can leverage this value without selling their property, providing access to funds when needed most. The Benefits of a Refi for Debt Consolidation & Holiday Spending While credit cards might seem like a tempting way to cover holiday expenses, the high interest rates can quickly make seasonal spending hard to manage. According to the Federal Reserve, the average credit card interest rate is currently around 22.76%, which can lead to a cycle of unmanageable debt. “There’s a lot of high interest out there, and people are carrying more debt than they’ve ever carried,” says Jimmy Hobson, UMortgage’s National Sales Leader. “A cash-out refinance not only helps you avoid this kind of debt but also gives you a way to tap into your home’s equity that you’ve already built through monthly mortgage payments.” With a cash-out refi, instead of taking on even more debt, you’re using the money you’ve already invested instead of relying on high-interest credit cards or personal loans. After you’ve closed your refinance, you'll get some breathing room before your first mortgage payment, typically due on the first of the month following a full 30 days after closing. For example, if you close on November 14th, you won’t make your first mortgage payment until January 1st. This means you could benefit from a month without a mortgage payment, freeing up extra funds for holiday spending or unexpected expenses. How to Know You’re Eligible for a Cash-Out Refinance Before you start planning your refinance, assess your eligibility and whether it makes sense for your current financial picture. Here are some things to consider: Assess Your Home Equity You should start by calculating your home equity to determine if you qualify for a refi. Your equity is the difference between your home’s current market value and what you still owe on your mortgage. You’ll need an appraisal to determine your home’s market value. A UMortgage Loan Originator will be able to connect you with a reliable appraiser in your area to help you determine the equity owned on your home. Reviewing Your Long-Term Goals There are many benefits to a refinance, but ultimately, you should only do it if it fits your long-term goals. Would it be more beneficial to use your home’s equity to invest, make home improvements, or save for the future? Taking out funds now can affect your mortgage balance and monthly payments, so consider how it aligns with your plans and whether it will keep you on track to achieve financial stability or growth. Get Connected with a UMortgage Loan Originator A UMortgage Loan Originator is your key to personalized mortgage advisory that puts your long-term financial health first. Once you connect with your LO, they’ll walk you through every step, from eligibility to planning, and ultimately unlock your home’s potential, giving you a smart, effective option for covering seasonal expenses. Follow this link and fill out the form to get connected with a UMortgage LO in your area. A cash-out refinance lets you tap the equity you've already built in your home, helping cover seasonal expenses while keeping your financial health in check. Whether for gifts, travel, or end-of-year projects, using your home’s value wisely can make all the difference in enjoying a stress-free holiday season. Follow the link above to see if this option will work for you this holiday season!