Mortgage Refinance FAQ:
Common Questions Answered

Calculate your break-even point: total closing costs ÷ monthly savings. If you'll stay past that point, refinancing saves you money. Most homeowners save money when rates drop at least 1% below their current rate, though even smaller drops can make sense if you're moving from an adjustable to a fixed rate or dropping PMI. Here's the simple math: if your closing costs are $5,000 and you save $250/month, your break-even is 20 months. If you plan to stay longer than that, refinancing is worth it. Use our refinance calculator →

Conventional refinancing generally requires a 620+ FICO score. FHA Streamline and FHA cash-out refinances accept scores as low as 500 (580+ for best rates). VA refinancing has no official minimum but most lenders want 580+. USDA also allows 620+. Your credit score directly affects your rate — a 740+ score gets the best pricing, while scores below 680 typically see higher rates. If your score is below these thresholds, options like FHA or non-QM loans may still work. See poor-credit refinance options →

FHA: 2 years after Chapter 7 discharge, 1 year after Chapter 13 filing (with court approval). Conventional: 4 years after Chapter 7, 2 years after Chapter 13 discharge. VA: 2 years after Ch7 discharge, 1 year after Ch13 (timely payments required). USDA: 3 years after Chapter 7. You must show re-established credit and no late payments during the waiting period. Full refinance-after-bankruptcy guide →

Yes, with additional steps. You'll need either an IRS lien subordination (Form 14134), payoff at closing, or an accepted installment agreement. The lender must be granted priority over the tax lien in order to close. FHA and VA have specific lien subordination requirements, while conventional lenders may require the lien to be paid in full. Dream Financial Management regularly helps homeowners with IRS tax liens refinance successfully. Full tax lien refinance guide →

When rates drop 1%+ below your current rate, your break-even point is under 3 years, or you need to change loan terms due to life circumstances (e.g., removing a co-borrower after divorce, dropping PMI, or switching from an ARM to a fixed rate). The "best time" isn't a calendar date — it's when the math works for YOUR situation. Watch the market, but also review your loan annually. If rates are flat, other factors like an improved credit score can make refinancing worthwhile. Read the full timing guide →

Typical refinance closing costs run 2-5% of your loan amount. For a $300,000 loan, that's $6,000-$15,000. Costs include the origination fee, appraisal ($300-$500), title insurance, credit report, recording fees, and pre-paid interest. You can often roll these costs into your new loan or accept a slightly higher rate for a "no-closing-cost" refinance. Always compare the total cost and your break-even point. Full closing costs guide →

Yes, but there are waiting periods. FHA requires 3 years after a foreclosure, with exceptions for extenuating circumstances. VA requires 2 years. Conventional requires 7 years (Fannie Mae/Freddie Mac standard). USDA requires 3 years. You'll also need to re-establish credit with an on-time payment history. If you've improved your financial situation and have equity in a new home, refinancing may be possible sooner than you think — especially with FHA or VA programs. Full post-foreclosure refinance guide →

Rate-and-term refinance changes your interest rate or loan term without taking cash out — ideal when rates drop. Cash-out refinance replaces your current mortgage with a larger one and pays you the difference in cash — useful for debt consolidation, home improvements, or major expenses. Cash-out typically has slightly higher rates and lower LTV limits (80% max for conventional, 80% for FHA). Rate-and-term is lower risk and cheaper. Choose cash-out only if you genuinely need the money and understand the reset on your payoff timeline. Read the full cash-out refinance guide →