A mortgage refinance is a transaction to pay off an existing mortgage loan with the proceeds of another, new, mortgage loan on the same property. A refinance usually reduces the interest rate and mortgage payment or term of the loan.
If you’ve been thinking about refinancing your mortgage, it’s important to understand the potential benefits, costs, and long-term impact. By carefully evaluating your options, you can determine whether refinancing aligns with your financial goals and helps you save money over the life of your loan.
At MSGCU, we have refinancing options available with many different mortgage programs and our mortgage experts can walk you through your options, as well as our competitive rates.
Why refinancing can be a smart financial move
1. Secure a lower interest rate
Refinancing a mortgage to a lower interest rate can offer several advantages, including:
- Lower monthly payments from reducing the amount of interest on your loan.
- Less interest paid over time, which can save you thousands of dollars over the life of the mortgage.
- Improved cash flow, giving you more room in your budget for savings, investments, or other financial goals.
2. Shorten the life of the loan
Refinancing into a shorter loan term, such as moving from a 30-year mortgage to a 15-year mortgage, can help you pay off your home sooner, build equity faster, and significantly reduce the amount of interest paid over the life of the loan. The important factor to consider is your monthly mortgage payment will potentially increase with a shorter loan term. Ensure you carefully review your budget with a mortgage professional to see if you can comfortably afford a higher payment.
3. Convert from an adjustable-rate mortgage to a fixed-rate mortgage
Refinancing from an adjustable-rate mortgage to a fixed-rate mortgage can provide predictable monthly payments and protection from future interest rate increases, helping homeowners achieve greater financial stability and peace of mind. Other benefits include long-term savings potential if you lock in a competitive fixed rate, and simplified budgeting since your principal and interest remain consistent over time.
4. Tap into your home’s equity
Some homeowners refinance to utilize their home’s equity. A cash-out refinance is a mortgage that replaces your existing loan with a new, larger one. The new loan pays off your original mortgage, and you receive the difference in cash. Homeowners often use these funds for home improvements, debt consolidation, education expenses, or other major financial needs. Since this option increases your mortgage balance, it’s important to consider the new payment, interest rate, closing costs, and long-term impact before deciding if tapping into your home’s equity is the right choice.
When refinancing may not be the right fit
While refinancing can offer meaningful benefits, it’s important to make sure the timing, costs, and loan terms align with your financial goals. Considering a few key questions upfront can help you feel more confident about whether refinancing is the right choice for your situation.
Will the refinance greatly lengthen the loan term?
If you only have 10 years left on your mortgage and you refinance to stretch out those payments over 30 years, you will pay more over time. Any money you save on lower payments will be offset in the cost of the refinance and the extra 20 years of interest you’ll be paying on your mortgage. Make sure you review with your mortgage professional to ensure you understand the impact and if this option will help you achieve your goals.
Do you plan on living in your home for much longer?
If you expect to move soon, refinancing may not provide financial benefits. The monthly savings can be helpful, but it’s important to compare those savings with the cost to refinance. If you sell your home before reaching the break-even point, you may end up spending more than you save.
How much will it cost?
A typical refinance can cost anywhere between 2-6% of the loan amount and depends on the lender and loan type. There are various fees that may apply and your lender will walk you through the total cost for refinancing. Through September 30, MSGCU is offering $99 mortgage processing* to help you save over $600 on closing costs.
If you determine refinancing is not the right option, and you need to tap into your home's equity, consider an MSGCU home equity loan. This loan can be used to complete renovations, consolidate debt, pay for education costs, or cover other large expenses.
Connect with MSGCU for help
MSGCU mortgage experts are here to support you with local, personalized guidance. We can walk you through your options to determine if refinancing is the best choice for your financial goals. Give us a call, chat or video bank online, or make an appointment at any of our convenient 24 branch offices to learn more about refinancing.
*$99 mortgage processing fee offer available for mortgage loans originated and disclosed between 5/1/2026 and 9/30/2026 and saves $646 on mortgage processing when you obtain a mortgage from MSGCU. Homebuyers are responsible for any third-party closing costs including but not limited to home appraisal, home inspection, title, tax, and insurance. A loan amount of $200,000 amortized over 30 years at an interest rate of 6.375% has an Annual Percentage Rate (APR) of 6.436% and a payment of $1,247.74 with 0 points due at closing. The payment does not include property taxes or insurances, the actual payment will be higher.
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