How Does Mortgage Refinancing Work?

Get basic information about the mortgage refinance process so you know what to look for.

Why Refinance

Understand the Pros & Cons of Refinancing Your Mortgage.

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.

Tip: Find Your Break-Even Point

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.

Bottom line, while reaching your break-even point may take some time, if you’re in it for the long haul, you may be able to achieve some serious savings by refinancing.

Refinancing Demystified

Learn About Refinancing & How to Find Out if the Process Could Be Worth It for You.

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.

Refinance Process

How Does Mortgage Refinancing Work?

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

Tip: Reasons You Might Think About Refinancing

  • 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

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