To refinance a mortgaged home, assess your financial goals, compare current interest rates with lenders, and calculate potential savings. Secure pre-approval, submit loan applications, and undergo underwriting. Once approved, close the loan by paying closing costs and replacing the original mortgage. Key steps include evaluating creditworthiness, selecting the best loan terms, and managing fees to minimize out-of-pocket expenses.

Refinancing is beneficial when interest rates drop significantly, improving affordability or shortening the loan term. For example, the Federal Reserve reported that U.S. fixed-rate mortgages averaged 6.5% in mid-2023, down from 7.4% a year earlier, enabling borrowers to save $200 monthly on a $300,000 loan. Closing costs typically range from 2%-5% of the loan amount, but many lenders offer no-cost refinance options with higher interest rates. Debt consolidation through refinancing can reduce monthly payments by lowering rates or extending terms, though this may increase total interest paid over time. Data from the Consumer Financial Protection Bureau (CFPB) shows 65% of refinancers in 2022 aimed to reduce monthly burdens, while 25% sought shorter loan durations. Lenders may require a credit score above 620 and 20% equity to qualify, though government programs like FHA streamline refinancing relax these criteria. Refinancing is most advantageous when the net savings from rate reductions outweigh closing costs, often within 18-24 months.