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Mortgage Refinancing Options

Home mortgage refinancing can potentially lower your monthly payments by replacing your current mortgage with a new one that has more favorable loan terms. Refinancing may offer other benefits as well. After evaluating your financial goals, you can choose the type of refinancing that works best for your situation.

Types of refinance

If you want to make your payments more comfortable and your home value is steady or has increased, you may be able to refinance your mortgage.

You’ll go through an application, approval, and closing process, like when you got your original mortgage.

Some mortgages allow a “cash-out” refinance, so you can turn some of your home equity into cash or use it to pay off high-cost debt.

The money you take out will be added to the total balance of your mortgage loan. This can reduce the amount of equity in your home, add to the length of time it will take you to pay off your mortgage, and ultimately, require you to pay more total interest.

While there are situations in which this option makes sense, it’s something that you’ll want to consider carefully before moving forward.

A limited cash-out refinance replaces your existing mortgage with a new one that can take advantage of better terms like lower interest rates. It also allows you to walk away from the transaction with up to $2,000 or 2% of the new mortgage loan balance - whichever is less. This can give you ready funds to make home improvements.

Refinance Refinancing Options

Should I refinance?

If you’re wondering if refinancing is right for you, read more about what to consider.

Learn more

Review Fannie Mae refinance options

In addition to Fannie Mae’s standard mortgage refinance, we offer several options to help you make the most of your refinance. A mortgage lender can help you understand if one of these options is right for you.

Refinance for Fannie Mae loans

With RefiNowTM , eligible borrowers with Fannie Mae-owned loans may take advantage of benefits like:

  • A lower interest rate
  • Reduced monthly payments
  • Savings on up-front and out-of-pocket appraisal expenses

Talk to your lender or find a participating lender in your area who can help determine if RefiNow is right for you.

First, check if Fannie Mae purchased your mortgage

If your mortgage was purchased by Fannie Mae, you may be eligible for RefiNow. If you’re not, talk to a mortgage lender about the options available for you.

Check now
Limited cash-out refinance

HomeReady® has a limited cash-out refinance option designed to meet the diverse financial needs of borrowers. Refinancing with a HomeReady mortgage addresses common financial challenges:

  • 3% equity option. If you already have a Fannie Mae-owned loan, you can refinance with as little as 3% equity. If your mortgage isn’t owned by Fannie Mae, you can refinance with as little as 5% equity.
  • Co-borrower flexibility. Not all borrowers have to reside at the property. For example, parents who won’t be living in the home can be co-borrowers on the loan to help their children qualify for a mortgage and purchase a home. Income limits may apply. 
  • Additional income sources. Rental payments (e.g., from a basement apartment) may be considered as another allowable income source to help qualify a buyer.
HomeStyle Renovation
Refinance for home improvements

When you refinance a home with a HomeStyle® Renovation loan, you can finance improvements for up to 75% of the property’s as-completed value — that’s the appraised value of the home once the upgrades are in place.

This type of refinancing can be a more cost-effective way to renovate your home because it combines the cost of the home and renovations into a single conventional mortgage with one monthly payment. It also addresses common financial challenges with renovating a home by offering:

  • Solutions for out-of-pocket costs. You can benefit from upfront draws, which could help you avoid paying initial costs for contractors and architect fees out of pocket.
  • Simple payment solutions. Renovation funds get bundled into your mortgage under one loan, so you only make one monthly payment.
  • Endless renovation possibilities. HomeStyle Renovation can be used for any renovation project, such as updates to an older home, extensive design improvements, and even construction or renovation of additional living spaces like in-law suites and basement apartments.
HomeStyle Energy
Refinance for energy upgrades 

When you use a HomeStyle Energy limited cash-out refinance, you can finance improvements for up to 15% of your home’s as-completed value. This means refinancing your current home loan into a new mortgage to access the equity in your home and using it to pay for new energy improvements.

You can use the loan to make value-adding upgrades to your home, which can help:

  • Boost energy efficiency. Think about replacing a water heater with a more energy-efficient system.
  • Save on utility costs. Upgrades could include resealing or replacing air ducts or adding new insulation.
  • Repair or prevent damage from disasters. Enhancements could look like new storm surge and window barriers or landscaping to prevent wildfire from spreading.

You can also use a HomeStyle Energy refinance to pay off previously made improvements that were financed with a home equity line of credit, credit cards, or a Property Assessed Clean Energy (PACE) lien. 

Next step

Contact your mortgage lender for more information on the best refinance options for your specific needs. You can choose the lender you already worked with for your existing mortgage or find another one. Different lenders may offer different loan terms, so it’s a good idea to contact several before choosing one.

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