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Consumer Financial
Protection Bureau
Should I renance?
Renancing happens when you
pay off your current mortgage
with money from a new mortgage.
Often homeowners renance to try to lower the
cost of their mortgage. For example, you might be
able to get a new mortgage with a lower interest
rate when interest rates fall. But there are usually
tradeoffs, so here are some questions to help you
think about whether renancing is a good nancial
move for you.
Renancing may remind you of what you went
through when you got your current mortgage.
You could go through many of the same steps
and could pay many of the same costs when you
renance.
Take stock of your situation
If you check any of these boxes, it might not make
sense to renance your mortgage.
£ Are you planning to move soon?
If you know you’re going to move in the next few
years, you might not have time to recoup the cost
of renancing.
£ Has the value of your home fallen?
If the market value of your home is lower now
than when you took your original mortgage, it may
be harder to nd a renancing loan that is more
favorable than your current loan. Homeowners who
have money available to pay down their loan may
nd better options for renancing.
£ Has your credit standing declined?
Your credit score affects the cost of your loan. If
your score has fallen, review the interest rate and
other terms you are offered to be sure the loan is
still a good deal.
£ Does your mortgage have a
prepayment penalty?
Check your loan documents to see if your
mortgage has a prepayment penalty. If so, you have
to pay the penalty if you renance your mortgage.
Look at the cost to renance,
and compare it to the benets
If you are ready to consider a renance, you can
start by weighing the costs of a new mortgage
against your goals for renancing. When you ask a
lender for a renance, you receive a Loan Estimate
that shows all the features of the loan, including
whether there is a prepayment penalty, as well as
the total dollar cost of the loan. This amount is the
price you pay to achieve the potential savings and
other benets shown in the illustrations on the
next pages.