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How Does Mortgage Refinancing Work?
Get basic information about the mortgage refinance process so you know what to look for.
Refinancing can be an opportunity to lower your monthly payments, pay off your loan quicker, reduce your overall interest expense or access cash for unexpected expenses. But be sure to weigh the costs and benefits before you apply.
Similar to when you first purchased your home, refinancing your mortgage involves fees and closing costs that could add up to 1% or more of the new loan. Determining your break-even point—when your monthly savings will cover the cost of refinancing—can help you decide if it’s worth it. PNC also offers low and no closing cost options to reduce the upfront costs of refinancing.
By refinancing your current loan at a lower interest rate, you may be able to realize interest savings over the lifetime of the loan. Consult with a PNC Mortgage Loan Officer, you can explore the various options for refinancing and the possible benefits.
Interested in checking rates? Visit our mortgage refinance rate page.
To calculate your break-even point based upon monthly payment savings, estimate your savings based on your new monthly payment after the refinance. Then divide the fees and costs of the refinance by your estimated monthly savings.
Here’s an example: Cost to refinance: $1,800
- Monthly savings $100 = Break-even point of 18 months
- In this case, if you planned on staying in your home for more than 18 months, the cost of refinancing could be worth it. After reaching your break-even point, your savings would total $1200 a year.
Looking to refinance? See options to lower your interest rate, payment, change terms, consolidate debt / get cash out, or take advantage of specialized loan products and programs.
Which lending option is right for you depends on a number of factors, such as how much equity you have in your home, how long you plan to stay in your home and if you want to receive money back. Before you decide, you should understand the basics.
To apply for a refinance, you’ll need to provide information about your income, assets and debts, plus any special circumstances that may impact your ability to repay.
In addition, the lender will arrange for an appraisal of your home, flood determination, a title search and title insurance. They may also set up an escrow account to pay for necessary insurance and property taxes.
Traditional Mortgage Refinancing
When you refinance, you replace your current mortgage with a new mortgage that typically offers a lower rate. With a traditional refinance, you can typically expect:
- Lower interest rates
- Lower monthly payments
- Longer or shorter minimum loan terms
- More fixed-rate options
Second Mortgages
If your current first mortgage rate is better than the rates now available, or you are looking to refinance to access the equity in your home, a second mortgage may be an option to consider. A second mortgage:
- Places an additional lien against your home
- Requires a separate monthly payment from your first mortgage
- Is a product available to eligible customers who have equity in their homes
Already a PNC Customer? That can make refinance easier.
When you start the process, PNC can see your current loan information, such as:
- Interest rate
- P&I
- Term
- Years left on the loan
- Payment breakdown (taxes, insurance, PMI).
This information makes it easier to calculate payments and savings.
- Lower your monthly mortgage payments
- Eliminate Private Mortgage Insurance (PMI)
- Pay less interest over the life of your loan
- Consolidate your debt
- Reduce your term to pay off your loan faster
- Access cash from the equity in your home for projects such as home improvements
Calculate Rates & Savings
Check rates and use a variety of calculators to better understand how a mortgage refinance can affect your finances.
Use a variety of tools to:
- Check mortgage refinance rates in your area.
- Calculate your monthly payment.
- See how much you could save with a mortgage refinance.
Learn about the Process
Not sure where to start or new to mortgage refinancing? Learn the basics so you're able to make the best decision for you.
Apply Online Today
- View rates, estimated closing costs and monthly payments before applying.
- Complete the application and lock your rate from your computer or mobile device.
- Track your application's progress through closing with PNC Home Insight® Tracker.
Important Legal Disclosures & Information
Refinancing at a longer repayment term may lower your mortgage payment, but may also increase the total interest paid over the life of the loan. Refinancing at a shorter repayment term may increase your mortgage payment, but may lower the total interest paid over the life of the loan. Contact us to discuss the option that best meets your needs.
All borrowers must satisfy all conditions outlined in a commitment letter issued in connection with an application for mortgage credit. Final loan approval and amount are subject to verification of loan data, property appraisal and underwriting conditions. Program terms are subject to change.
PNC, PNC HomeHQ, PNC Home Insight and Home Insight are registered service marks of The PNC Financial Services Group, Inc. ("PNC"). PNC has a pending patent application directed at various features and functions of Home Insight® Tracker and Home Insight® Planner. All loans are provided by PNC Bank, National Association, a subsidiary of PNC, and are subject to credit approval and property appraisal.
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©2022 The PNC Financial Services Group, Inc. All rights reserved. PNC Bank, National Association.
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