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?
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
- Offers consistent monthly payments
- Provides protection from interest rate increases
- Multiple term options (e.g., 15, 20, or 30 years)
- Option to refinance again in the future
Cons
- Eligibility criteria may be stricter than other programs
- Shorter loan terms can have higher monthly payments
- Additional closing costs are usually required
Talk to our mortgage experts today about finding the right loan for you.
Alternatives to a Refinancing with a Fixed-Rate Mortgage
- Offers a competitive fixed-rate interest period
- Interest then adjusts annually based on the program's index plus margin
- Interest rate adjustments are capped
- Allows borrowers to pay only the interest for a set period
- Can temporarily make payments more manageable
- Ideal for borrowers who plan to sell or refinance before principal payments begin
- Can be used to refinance high-value properties that exceed conforming loan limits
- Available in fixed and adjustable-rate programs
- Ideal for borrowers who still owe a significant balance on their mortgage
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?
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FAQ
Does refinancing “reset the clock” on my mortgage payoff schedule?
Does fixed-rate mortgage refinancing come with closing costs?
Can I still refinance if my home has lost value since I originally purchased it?
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