How to Refinance a Fixed Rate Mortgage

How to Refinance a Fixed Rate Mortgage

Refinancing a fixed rate mortgage can help you lower your monthly payments, shorten your loan term, or access your home’s equity. But the process isn’t always straightforward. To get the best outcome, you’ll need to understand your timing, goals, and qualifications—especially in today’s evolving interest rate environment.

This guide from the Molly Dean Mortgage Team walks you through every step of how to refinance a fixed rate mortgage, including what documents you’ll need, how to qualify, and when refinancing actually makes financial sense.

What Does It Mean to Refinance a Fixed Rate Mortgage?

Refinancing means replacing your existing home loan with a new mortgage—one that may come with a different interest rate, loan term, or balance. If your current loan is a fixed rate mortgage, that means your interest rate doesn’t change over time.

Refinancing allows you to stay on a fixed-rate plan while updating your rate or structure, or to switch to a different type of loan if needed.

When Should You Refinance a Fixed Rate Mortgage?

Refinancing isn’t something you want to do too early—or too late. Here are some ideal times to consider refinancing a fixed rate mortgage:

• Interest rates have dropped since your original loan 
• You’ve improved your credit score or income 
• You want to switch from a 30-year to a 15-year term (or vice versa) 
• You need cash for home renovations or debt consolidation 
• You want to remove PMI from a loan with less than 20% equity at origination 

Timing is everything, and our team can help you decide if current market conditions make refinancing worthwhile.

Steps to Refinance a Fixed Rate Mortgage

Refinancing follows a process similar to your original mortgage. Here’s how it works:

1. Define your goal– Lower payment, shorter term, or cash out?
   
2. Review your current loan– Know your interest rate, remaining balance, and years left.
   
3. Check your credit score– A higher score can qualify you for better refinance rates.
   
4. Estimate your home’s value– This determines your equity and eligibility.
   
5. Compare lenders and loan offers– Rates, fees, and terms matter.
   
6. Submit an application– Provide documentation like pay stubs, W-2s, bank statements, and tax returns.
   
7. Get a home appraisal– Most refinance loans require a new valuation.
8. Complete underwriting and close – Review the final terms, sign the paperwork, and enjoy your new loan.

Refinance Options for Fixed Rate Mortgages

Depending on your goals, you can refinance into:

• Another fixed rate mortgage– Ideal for long-term stability with lower interest. 
• Shorter-term mortgage– Move from a 30-year to a 15-year to pay off your home faster and reduce interest costs. 
• Cash-out refinance– Tap into your home equity to fund major expenses. 
• Adjustable-rate mortgage (ARM)– Consider this if you plan to move in a few years and want an initial lower rate. 

We’ll walk you through the pros and cons of each to find the fit that aligns with your financial goals.

What You Need to Qualify for a Refinance

To refinance your fixed rate mortgage, you’ll need to meet a few common lender requirements:

• Credit score: 620+ for conventional loans; FHA and VA may allow lower 
• Equity: At least 20% for best rates; cash-out usually capped at 80% LTV 
• DTI ratio: Typically below 43% 
• Employment and income verification: W-2s, pay stubs, tax returns 
• Mortgage payment history: No recent late payments 

Your mortgage advisor will evaluate your full financial profile to determine your refinance eligibility.

Costs to Expect When Refinancing

Refinancing isn’t free. Here are some of the common costs to be aware of:

• Origination fees 
• Appraisal fee 
• Title and escrow fees 
• Credit check and underwriting fees 
• Prepaid interest and taxes 

You can roll many of these costs into your new loan or pay them upfront. We’ll help you evaluate which option saves the most in the long run.

Can You Refinance a Fixed Rate Mortgage Into a New Fixed Rate?

Yes. In fact, many homeowners refinance into a new fixed rate mortgage to lock in a lower rate or shorten the term of their loan. This is especially common when rates drop, or if your original rate was higher due to low credit or a small down payment.

The advantage? Predictable payments for the life of the loan, with better terms than before.

How Soon Can You Refinance After Closing on a Fixed Rate Mortgage?

Timing varies by loan type and lender, but here are general rules:

• Conventional loan: You can refinance after 6 months 
• FHAor VA loan: May allow streamline refinancing after 210 days 
• Cash-out refinance: Typically requires 12 months of ownership 
• Post-modification or forbearance: Additional waiting periods may apply 

We’ll review your loan and let you know when you’re eligible—and when it makes the most financial sense.

Let the Molly Dean Mortgage Team Guide Your Refinance

If you’re ready to refinance your fixed rate mortgage, we’ll help you make the most of it. Whether you’re chasing a better rate, eliminating PMI, or shortening your loan term, our team brings the tools, knowledge, and personal guidance to help you succeed.

We’ll review your current loan, assess your refinance options, and handle the paperwork from start to finish.

Let’s get started.

Use our Refinance Calculatoror contact the Molly Dean Mortgage Team today for a personalized refinance review.