Refinancing Your Mortgage Home Loan

If you're looking to lower your monthly mortgage payment, change your mortgage type, consolidate debt, or make a major purchase, refinancing your mortgage could be a great option.

5 good reasons to refinance your home mortgage

  • Lower your monthly mortgage payment

    You may want to refinance your mortgage if you can get a lower interest rate. With a new mortgage at a lower rate, you may be able to

    • lower your monthly payment
    • free up additional cash for you to use toward other financial goals
    • potentially save thousands of dollars over the life of the loan

    Please note: The more you have left to pay on your mortgage, the more you could save. If you're close to paying off your mortgage, what you save on refinancing may not be as large.

  • Get a cash-out refinance to tap into your home's equity

    A cash-out refinance allows you to withdraw equity built up in your home to use for other things. Your new mortgage will be higher than the balance of your current one, but you will get the difference in cash, to spend now, on anything you want. Some more common uses are:

    • Large home improvements
    • Consolidating other high interest loans or credit card debt
    • A vacation, education expenses or other reasons

    You will need to have enough equity in your home to make this possible, though other factors like your credit score, how long you've had your mortgage (sometimes referred to as "seasoning") make a difference, too. Talk with a loan officer for more information.

  • Pay off your mortgage and own your home sooner

    Paying less interest over time may help save you thousands of dollars and let you achieve goals like paying off your mortgage prior to retirement. A potential downside of reducing the mortgage term (the length of the mortgage loan) is an increase in the monthly payment.

  • Change your mortgage loan type

    If you have an adjustable rate mortgage (ARM) and are concerned that your interest rate and monthly payment might increase, refinancing to a fixed rate mortgage can provide a stable monthly payment. People who plan to stay in their homes for 7 years or longer tend to prefer fixed rate mortgages. Alternatively, if you know you will only be in your home for a short time, refinancing to an ARM could provide monthly savings and additional cash flow. It's best to talk with your loan office to determine the right approach for your situation.

  • Remove private mortgage insurance

    If you put down less than 20% of the purchase price when you first purchased your home, or have an FHA loan, you most likely have mortgage insurance as part of your monthly payment. Depending on the equity now in the property, mortgage insurance can be removed and save you money every month. Check with a loan officer to see if you're eligible to remove your mortgage insurance payment.

Take these steps to refinance your mortgage

Generally, the process of refinancing a mortgage is the same as buying a home

  1. You'll complete a mortgage application, providing information about your current income and assets along with details on your current mortgage

  2. The lender will obtain a credit report, send you disclosures, including a Loan Estimate, and rate lock agreement, which confirm the terms of your refinance

  3. An underwriter will review your application for approval, and an appraisal and title insurance will be obtained

Remember, there will be closing costs associated with refinancing—typically between 1% to 3% of the amount of the new mortgage. These costs can be paid out of pocket at closing or rolled into the new loan amount if you have enough equity in your home.

Mortgage refinance calculator

Use TD Home Loan Match to view your rate and payment options and see if a mortgage refinance is right for you.

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