How to Refinance with a Conventional Loan and Save Big
Want a Lower Payment or Quick Cash-Out? A Refinance Might Be Your Answer.
A conventional refinance loan is one of the smartest moves homeowners can make—especially if rates have dropped, you’ve built equity, or your financial goals have shifted.
In this guide, we’ll show you exactly how refinancing works, how to qualify, and when it makes sense to pull the trigger. We’ll also let you run the numbers live with our embedded calculator.
What Is a Conventional Refinance Loan?
A conventional refinance replaces your current mortgage with a new one—usually with better terms. It’s not tied to a government program like FHA or VA, so it gives you more flexibility in property types and loan structures.
Refinance Goals Include:
- Lower your monthly payment
- Shorten your loan term (30 → 15 years)
- Switch from ARM to fixed
- Remove PMI
Pull cash out for renovations, debt consolidation, or investment
How Do You Qualify for a Refinance?
Requirements are similar to a purchase loan:
- 620+ credit score
- 20%+ equity to remove PMI (if desired)
- DTI under 45%
- Stable income or employment
- Property value verification (appraisal may be required)
Already have a Fannie Mae or Freddie Mac loan? You may qualify for a streamlined refinance with fewer steps.
Self-employed or complex income? Explore Bank Statement Refinance Loans
Cash-Out vs. Rate-and-Term: What’s the Difference?
Rate-and-Term Refinance
- Just changes your rate, term, or loan structure
- Great for lowering payments or eliminating PMI
Cash-Out Refinance
- Lets you borrow against your home equity
- Use funds for home improvement, pay off high-interest debt, or invest
Need cash to remodel? Pair this with our Home Renovation Loan Guide.
When Should You Refinance?
Refinancing makes sense when:
- Rates drop at least 0.5–1.0%
- You plan to stay in the home long enough to hit your breakeven point
- You want to get rid of PMI
- You need liquidity from home equity
You want to switch to a shorter term or fixed rate
Final Word: It’s Your Equity—Use It Wisely.
Whether you’re trying to reduce your payment, cut your loan term, or cash out to invest, a conventional refinance gives you the power and flexibility to upgrade your financial situation.
Schedule Your Free Discovery Call
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