Question 1

When does refinancing actually make sense?

Accepted Answer

The classic rule is when you can drop your rate by 0.75% to 1% or more and you plan to stay in the home long enough to recoup the closing costs (the break-even, usually 24 to 48 months). But rate is only one reason. Refinancing also makes sense to shorten your term, drop mortgage insurance you cannot otherwise remove, pull cash out at a competitive rate, or consolidate higher-rate debt.

Question 2

What is the difference between rate-and-term and cash-out refinancing?

Accepted Answer

Rate-and-term refinancing replaces your existing mortgage with a new one at a different rate, term, or both — your loan balance stays roughly the same. Cash-out refinancing pays off your existing mortgage and gives you a new, larger loan; the difference is paid to you in cash at closing. Cash-out is useful for renovations, debt consolidation, or investing, but it usually has a slightly higher rate and stricter loan-to-value caps.

Question 3

How much does it cost to refinance?

Accepted Answer

Closing costs on a refi usually run 2% to 4% of the loan amount and include lender fees, third-party fees (appraisal, title, recording), and prepaid items (taxes, insurance). Some lenders advertise 'no-cost' refis, which really means the costs are rolled into the rate or the balance — not free. We model both options on every refi so you can see the break-even clearly.

Question 4

Does the refinance quiz hit my credit?

Accepted Answer

No. Nothing in this quiz pulls credit or shows up on your report. You self-report a credit score range so we can match you to realistic programs. A formal application later involves a credit pull, and that step is disclosed upfront.

Should I Refinance? — Refinance Assessment Quiz