Question 1: Does refinancing have costs?
Yes, refinancing does come with costs, usually between $2,000 – $3,500.
But in most cases, you can choose not to pay out of pocket:
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Costs can be rolled into the loan amount
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Or covered through lender credit
In some states using TRAC Lite, if you also qualify for an Appraisal Waiver, the total cost may be as low as around $2,000.
Question 2: How much can refinancing save me?
Let’s assume your interest rate drops from 6.5% → 5.5%:
π A $300,000 loan saves about $2,300/year.
π A $500,000 loan saves nearly $4,000/year.
If your budget allows, switching from a 30-year fixed to a 15-year fixed makes savings even more powerful.
Example with a $200,000 loan:
Key takeaways:
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Monthly payment is $330 higher
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But you pay $6,862 more principal in the first year
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And save a massive $168,000+ in lifetime interest
Question 3: Will refinancing change my loan term?
Yes. When you refinance, you can choose the loan term that fits your financial goals:
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Traditional: 15-year fixed, 30-year fixed
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Flexible options: 18-year, 22-year, etc.
This flexibility helps you balance monthly payment comfort with interest savings.
✅ In Summary:
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Refinance costs are typically modest — often with no cash out of pocket.
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Lower rates can lead to significant monthly and lifetime savings.
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Choosing the right loan term helps you build equity faster and save more in the long run.