What is mortgage refinancing?

Mortgage refinancing replaces your existing home loan with a new mortgage. The refinance can modify interest rate, loan term, monthly payment amount, loan type (for example, switching between adjustable-rate and fixed-rate mortgages), or tap into home equity through a cash-out refinance. The goal is to improve overall financial outcomes—lowering interest costs, consolidating debt, or funding home improvements—while maintaining secure homeownership.

Refinance options offered

• Rate-and-term refinance: Reduce your interest rate or change the loan term to lower monthly payments or shorten the payoff period while keeping the outstanding balance intact.
• Cash-out refinance: Replace your current mortgage with a larger loan and receive the difference in cash to use for renovations, education, debt consolidation, or other needs.
• Streamline refinance: A simplified process for qualifying borrowers that can minimize documentation and underwriting requirements when switching between certain loan programs.
• Adjustable-to-fixed refinance: Convert an adjustable-rate mortgage (ARM) to a fixed-rate mortgage to stabilize payments and protect against future rate increases.
• Fixed-to-adjustable refinance: In select situations, moving to an ARM may lower initial payments if shorter-term affordability is the priority.

Key benefits of refinancing with Truist Financial

• Potentially lower monthly payments: Reduced interest rates or extended loan terms can decrease monthly obligations, freeing cash flow for other priorities.
• Interest savings over time: A lower rate or shorter term can significantly reduce total interest paid over the life of the loan.
• Access to home equity: Cash-out refinances provide liquidity for home projects, investments, or debt consolidation at mortgage rates that may be lower than unsecured options.
• Payment stability: Switching to a fixed-rate mortgage can remove uncertainty from future monthly payments.
• Consolidation and simplification: Refinance to consolidate multiple debts into a single, manageable monthly mortgage payment.

Who should consider refinancing?

Refinancing may be appropriate if you meet one or more of these objectives:

• You can obtain a significantly lower interest rate than your current loan.
• You want to shorten your loan term and are able to handle a higher monthly payment for long-term savings.
• You need funds for home improvements, education, or other major expenses and prefer a mortgage-backed source of financing.
• You have an adjustable-rate mortgage and want a more predictable fixed payment.
• You aim to consolidate higher-interest debt into a single, lower-rate mortgage payment.

Typical eligibility requirements

Eligibility criteria vary by product and borrower profile, but common factors include:

• Creditworthiness: A satisfactory credit history and score help secure favorable terms.
• Property eligibility: Primary residences, second homes, and investment properties may have different program rules and limits.
• Loan-to-value ratio (LTV): The amount you owe relative to your home’s value affects whether you qualify for rate-and-term or cash-out refinance options.
• Income and employment verification: Documentation of stable income and employment history is commonly required.
• Current mortgage status: Loans in good standing and without recent delinquencies are more likely to qualify.

Costs and fees to expect

Refinancing generally involves closing costs and fees similar to those for an original mortgage. Typical costs include appraisal fees, title and recording fees, underwriting and processing fees, and prepaid items such as escrow and interest. It’s important to compare the total cost of refinancing against the expected savings to determine whether the transaction is financially advantageous.

Consider the break-even point—the time it takes for the monthly savings to cover closing costs. If you plan to stay in your home beyond that point, refinancing is more likely to deliver net benefits.

The refinance process

While timelines can vary, the typical refinance involves these steps:

1. Initial assessment: Review your current mortgage, financial goals, and eligibility to determine which refinance option is suitable.
2. Pre-qualification: Provide basic financial details for a preliminary assessment of terms you may qualify for.
3. Application: Submit a formal application with documentation such as income verification, bank statements, ID, and details about your current mortgage.
4. Underwriting and appraisal: The lender evaluates the loan file and often orders an appraisal to confirm property value.
5. Clear to close: Once underwriting conditions are satisfied, the loan receives final approval and a closing date is scheduled.
6. Closing: Sign documents, pay closing costs (unless rolled into the loan), and the new mortgage is funded to pay off the existing loan.

Processing times depend on the loan type, documentation complexity, appraisal scheduling, and market conditions.

Documents commonly required

• Recent pay stubs and W-2s or tax returns for self-employed applicants
• Bank statements and asset documentation
• Current mortgage statement
• Photo identification
• Proof of homeowners insurance

Considerations and tips

• Run a clear cost-benefit analysis before refinancing. Factor in closing costs, remaining time you expect to own the property, and potential rate changes.
• Maintain strong credit and stable employment to maximize your chances of favorable terms.
• Ask about options to roll closing costs into the loan, as well as any prepayment penalties on your existing mortgage.
• Compare fixed and adjustable rate options and evaluate scenarios for interest rate movements over your expected holding period.
• Keep records of key dates and documents, and plan ahead for appraisal and inspection scheduling to avoid delays.

Frequently asked questions

How long does refinancing take?

Typical timeframes range from a few weeks to several weeks depending on documentation, appraisal scheduling, and underwriting complexity.

Will refinancing affect my credit score?

Applying for a refinance may involve a credit inquiry that can temporarily affect your credit score. Over time, responsibly managed mortgage accounts can support credit health.

Can I refinance if I recently bought my home?

Some loan programs have seasoning requirements that require a certain period after purchase before refinancing is allowed; others may permit refinancing sooner under specific conditions.

Is a cash-out refinance a good idea?

Cash-out refinancing can be advantageous when financing large projects or consolidating high-interest debt, but it increases your mortgage balance and may extend the repayment period. Consider long-term implications carefully.