Typically the primary motivation for refinancing any type of loan is to obtain a lower interest rate, thereby saving money for the life of the loan. This is true of refinancing a mortgage. But what if you already have a decent interest rate? Is it worth going through the loan process and paying closing costs for a rate even a small fraction of a percentage point better? The short answer: it could be. While you shouldn’t underestimate the long-term impact of a tenth or hundredth of a percent, there may be other reasons to refinance than just obtaining a better rate.

Eliminating Mortgage Insurance

Depending on the type of mortgage you currently have and the size of your down payment, there may be more to your monthly payment than just principal and interest. In many cases, if you put less than 20% down, you are also paying mortgage insurance.

If your home has increased in value since obtaining your mortgage, you may have enough equity to eliminate your mortgage insurance. This could potentially save you thousands of dollars in addition to the savings afforded by a lower interest rate.

Switching from an ARM to Fixed Rateshutterstock_246478255

Interest rates have been near historic lows for a while, making it a great time to refinance. This may be especially true if you currently have an adjustable rate mortgage. Rates will inevitably go up, at least eventually, and possibly even before the end of the year. Refinancing your ARM to a fixed rate mortgage would allow you to lock in current low rates, hedging against impending rate increases.

Refinancing to a new loan type doesn’t necessarily have to mean beginning another 30-year obligation. You may have the option to refinance to a shorter 10-, 15- or 20-year term.

Access to Your Equity

Another reason some homeowners choose to refinance is to have access to the equity in their homes. This can be accomplished through a Cash-Out Refinance. As an alternative to a home equity loan or home equity line of credit, a Cash-Out Refinance results in a single loan instead of a second lien against your home.


If you want to access the equity in your home to complete upgrades or renovations to your property, you might consider a renovation loan that allows you to refinance and finance renovations in a single loan.

Is refinancing right for you?

While there can be a number of benefits to refinancing, a licensed mortgage loan officer can help you determine if it’s the appropriate next step for you. Suitability depends on several factors including the type and status of your current loan, your personal financial goals and your eligibility for the various loan programs, all of which have unique requirements. Visit www.castlecookemortgage.com/locations to find a loan officer near you.

Castle & Cooke Mortgage, LLC® (NMLS #1251) is a leading independent mortgage lender headquartered in Salt Lake City, Utah, with locations across the United States.

Restrictions may apply. Not all who apply will qualify. Program qualifications & offerings are subject to change at any time. Equal Housing Opportunity. Click here to view state-specific disclaimers.