What You’ll Need to Qualify

Once you've set a goal, make sure you're ready to refinance. Key factors include:

• Time in the Home
  You typically need to have owned your home for at least six months. The more equity you’ve built—through payments or rising property values—the better.
• Equity in Your Home
  Lenders usually look for at least 20% equity to approve a refinance. You build equity by paying down your mortgage and as your home's market value increases.
• Credit Score
  A higher score helps secure better terms. Check your credit report to understand how you may qualify.
• Debt-to-Income Ratio
  Lenders want to see your total debt—mortgage included—stay below 50% of your gross monthly income.
• Funds for Closing Costs
  Expect to pay 2%–5% of the loan amount in fees. Some lenders let you roll these costs into the new mortgage, but it’s good to be prepared.

Plan for the Long-Term

Refinancing isn't just about saving money today—it can help shape your future:

• Pay Off Your Home Before Retirement
  Freeing yourself from a mortgage before retiring can reduce financial stress when you're living on a fixed income.
• Boost Property Value
  Using equity to renovate may increase your home’s market appeal—and resale value.
• Shield Against Rate Hikes
  Locking in a low fixed rate now can protect you from future increases.
• Fund Major Goals
  Cash-out refinancing can help you consolidate debt, finance home improvements, or grow your retirement savings.

Think ahead: Where do you see yourself in five years? A smart refinancing move today could lay the groundwork for the future you want. At CommonWealth, we have a variety of mortgage solutions that will fit your goals and budget.