Fixed-Rate Refinancing: An In-Depth Look

Fixed-rate refinancing offers homeowners a predictable solution for managing their monthly mortgage payments. Get an in-depth look at how fixed-rate refinancing works below.

What Is Fixed-Rate Mortgage Refinancing?

Fixed-rate mortgage refinancing offers a stable interest rate throughout the life of the loan. This program:

Provides payment stability

Fixed-rate mortgage refinancing gives borrowers one stable payment for the life of the entire loan, regardless of the mortgage term or future market fluctuations.

Comes in various loan types and sizes

Borrowers can choose between conforming loans, jumbo loans, government-backed loans, and more to fit their financial circumstances

Is ideal for long-term homeowners

This program works well for those who are planning to stay in their homes for a long time. With a stable interest rate, you can maximize the value of your investment without sacrificing peace of mind.

What Can Fixed-Rate Mortgage Refinancing Be Used For

Switching from an adjustable-rate mortgage (ARM)

Refinancing to a fixed-rate mortgage is ideal for homeowners with an ARM who are approaching the adjustment period of their loan. By switching, you can lock in a stable interest rate for the life of the loan.

Removing private mortgage insurance (PMI)

Refinancing with a fixed-rate mortgage can also help homeowners with more than 20% equity in their properties remove private mortgage insurance (PMI).

Converting home equity into cash

This type of refinancing also offers a great way for borrowers to access their home equity for a variety of purposes, like home renovations, consolidating high-interest debt, and more.

Pros

Cons

Talk to our mortgage experts today about finding the right loan for you.

Alternatives to a Refinancing with a Fixed-Rate Mortgage

Adjustable-Rate Mortgage (ARM) Refinancing

Interest-Only Mortgages

Jumbo Mortgage Refinancing

How Do I Know If Fixed-Rate Refinancing Is Right for Me?

Current market rates are favorable

If current market interest rates are desirable, refinancing to a fixed-rate mortgage allows you to keep this rate for the life of the loan.

You intend to stay in your home long-term

If you want to stay in your home long-term, refinancing to a fixed-rate mortgage offers protection from market fluctuations and makes your loan easy to manage while you build equity.

You're switching from an adjustable-rate mortgage

If you currently have an ARM and want to avoid future rate changes, refinancing to a fixed-rate loan can give you the stable, consistent payments you need.

When Is the Best Time to Use Fixed-Rate Mortgage Refinancing?

The best time to use fixed-rate mortgage refinancing is when you’re at a life stage where financial stability and predictability are key priorities.For instance, if you’re preparing for retirement and want consistent payments that fit your fixed income, fixed-rate refinancing can provide peace of mind. Or, if you’re starting a family, financial predictability makes it easier to budget for new household needs.By eliminating uncertainty in your mortgage payments, you can better plan for the future, manage day-to-day expenses, and create a solid foundation for your next chapter.

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FAQ

Does refinancing “reset the clock” on my mortgage payoff schedule?

When you refinance, you take out a brand-new loan to replace your existing mortgage. This means your repayment schedule starts over and you owe the new amount. For example, if you pay your mortgage down for 5 years, and then refinance with a 30-year mortgage, you will have 30 years left on your loan—not 25. It’s important to compare the benefits of refinancing to the potential drawbacks of a longer mortgage term before making a decision.

Does fixed-rate mortgage refinancing come with closing costs?

Just like with an original home purchase, refinancing also involves closing costs that cover different fees and services. This includes things like loan origination fees, appraisal fees, title insurance, and other administrative expenses. Depending on the refinancing program you choose, you may have the option to roll some or all of these costs into your new mortgage balance instead of paying them upfront.

Can I still refinance if my home has lost value since I originally purchased it?

While refinancing a home that has depreciated in value since its purchase can be challenging, there are specific programs that are designed for homeowners with reduced or even negative equity. For instance, Fannie Mae’s High LTV Refinance Option or Freddie Mac’s Enhanced Relief Refinance can be used even when your property’s value is lower than your outstanding mortgage balance.

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