Refinancing in Charlotte: How to Compare Your Refinance Options in NC and SC
The right refinance depends on what you want it to do. Lowering your rate or payment, shortening your term, removing mortgage insurance, switching out of an adjustable rate and pulling cash from your equity are different transactions with different rules and pricing.
Start with the goal, then compare your options using the break-even point and total cost—not just the new interest rate.
This guide covers the main refinance options for homeowners in the Charlotte area, North Carolina and South Carolina, and how to tell whether refinancing may make sense for you.
I'm Paul Mattos, a mortgage broker with Refine Mortgage, licensed in North Carolina and South Carolina. As a broker, I compare refinance options from multiple wholesale lenders.
Common Reasons to Refinance
Homeowners refinance for different reasons, including:
Lower your interest rate or payment. This may be worth exploring when market rates have changed, your credit profile has improved or your current mortgage no longer fits your needs.
Shorten your term. Moving to a shorter loan term may reduce the amount of time you pay interest, although the monthly payment can increase.
Remove mortgage insurance. Depending on your current loan and equity, refinancing may provide a path to eliminating monthly mortgage insurance.
Switch from an adjustable to a fixed rate. This may be useful if your ARM's initial fixed period is ending and you want a fixed interest rate.
Take cash out. A cash-out refinance can convert a portion of your home equity into funds for renovations, debt consolidation, education or other goals.
Change who's on the loan. After a divorce or another change in ownership or finances, refinancing may be used to remove a borrower, subject to qualification and applicable requirements.
The first question isn't simply, "What's today's refinance rate?"
It's what are you trying to accomplish?
Rate-and-Term Refinance
A rate-and-term refinance replaces your current mortgage with a new mortgage primarily to change the interest rate, loan term or both, without taking significant cash out beyond amounts permitted under the applicable program.
This is the type of refinance commonly considered when a homeowner wants to:
Reduce an interest rate or payment
Shorten the loan term
Move from an adjustable-rate mortgage to a fixed-rate mortgage
Change from one mortgage program to another
Rate-and-term refinances can have different loan-to-value limits and pricing from cash-out refinances because you're not using the transaction primarily to withdraw equity.
Cash-Out Refinance
A cash-out refinance replaces your existing mortgage with a new mortgage and converts some of your available home equity into cash.
The new mortgage is generally larger than the balance being paid off, with eligible proceeds available after the existing mortgage and applicable transaction costs are addressed.
For a conventional cash-out refinance under current Fannie Mae guidelines, important requirements can include:
A one-unit primary residence may generally be financed up to 80% loan-to-value, subject to the applicable guidelines.
At least one borrower generally must have been on title for at least six months before the new loan is disbursed.
If an existing first mortgage is being paid off, that mortgage generally must be at least 12 months old when measured from the existing note date to the new note date.
Second homes and investment properties generally have lower maximum cash-out loan-to-value limits.
There are exceptions to some ownership and seasoning requirements, including certain delayed-financing transactions, inherited properties and other eligible circumstances.
FHA and VA also have cash-out refinance options for eligible borrowers, but their requirements differ from conventional financing and can be affected by lender-specific guidelines.
Cash-out refinancing can also be priced differently from a rate-and-term refinance.
Most importantly, remember that a cash-out refinance replaces your entire first mortgage.
If you already have an attractive rate on your existing mortgage, compare a cash-out refinance with a HELOC or home equity loan before deciding.
Cash-Out Refinance vs. HELOC
A HELOC, or home equity line of credit, is generally a second mortgage that allows you to borrow against available home equity while leaving your existing first mortgage in place.
That's a major difference.
A Cash-Out Refinance May Be Worth Comparing When:
Replacing your existing first mortgage fits your overall plan
You prefer one mortgage rather than a first and second mortgage
You want to access equity as part of refinancing the existing mortgage
The complete refinance structure makes sense after considering the new rate, costs and term
A HELOC May Be Worth Comparing When:
You want to preserve your existing first mortgage
You need access to funds over time
You're planning a renovation with expenses occurring in stages
You prefer to borrow from a credit line as needed rather than replacing the entire first mortgage
HELOCs commonly have variable interest rates and usually include a draw period followed by a repayment period. Understand how the rate and payment can change.
A fixed-rate home equity loan may also be worth considering if you want a one-time amount while keeping your existing first mortgage.
My HELOC guide explains how home equity lines work and what to compare.
FHA Streamline Refinance
If you already have an FHA-insured mortgage, an FHA Streamline Refinance may provide a more streamlined way to refinance into another FHA mortgage.
"Streamline" refers to the documentation and underwriting process. It does not mean the refinance has no requirements or costs.
Among the current FHA requirements:
The mortgage being refinanced must already be FHA insured.
The existing mortgage must meet FHA payment-status requirements.
The refinance must provide a net tangible benefit under FHA's rules.
FHA seasoning requirements generally include at least six payments on the existing FHA mortgage, at least six full months since the first payment due date, and at least 210 days since the closing date.
FHA Streamline transactions can be available as credit-qualifying or non-credit-qualifying refinances depending on the circumstances.
A new appraisal may not be required in some FHA Streamline transactions.
If you currently have an FHA loan, my guide to FHA Streamline refinancing explains the program in more detail.
VA IRRRL
Eligible homeowners with an existing VA-guaranteed mortgage may be able to use a VA Interest Rate Reduction Refinance Loan, commonly called an IRRRL.
The program is generally designed to refinance an existing VA loan into another VA loan, often to reduce the rate or move from an adjustable rate to a fixed rate.
VA IRRRLs have specific requirements involving areas such as:
Loan seasoning
Payment history
Net tangible benefit
Interest-rate reduction when applicable
Recoupment of certain refinancing costs
VA seasoning rules generally require both the applicable 210-day period and six consecutive monthly payments before the existing VA-guaranteed loan is considered seasoned.
VA also applies a recoupment test to applicable IRRRL costs, subject to the program's rules and exceptions.
Lenders can have additional requirements beyond FHA or VA minimum guidelines.
Refinancing to Remove Mortgage Insurance
Before refinancing solely to remove mortgage insurance, first determine whether you actually need a refinance.
On a conventional mortgage, you may be able to remove private mortgage insurance without refinancing if you meet the applicable requirements.
The Homeowners Protection Act provides certain cancellation and automatic-termination rights based primarily on the property's original value and mortgage amortization.
Servicers may also have processes involving current property value and a new valuation under applicable investor requirements.
That means a conventional borrower should investigate PMI cancellation before paying the costs of an entirely new mortgage just to eliminate PMI.
FHA mortgage insurance works differently.
Depending on when the FHA loan originated, the original loan-to-value and other factors, FHA annual mortgage insurance may remain for the life of the mortgage or for a specified period.
For borrowers whose FHA mortgage insurance cannot simply be canceled, refinancing into conventional financing may be one way to remove it if they qualify and the overall refinance makes financial sense.
My guide to removing PMI with or without refinancing explains the options.
How to Tell If a Refinance Makes Sense
A lower interest rate by itself doesn't tell you whether you should refinance.
Look at what you spend to get the new mortgage and what you receive in return.
Calculate Your Break-Even Point
A basic break-even calculation is:
Relevant refinance costs ÷ monthly savings = approximate break-even period
That gives you an estimate of how long it may take for the monthly savings to recover the relevant upfront refinancing costs.
If you expect to sell, pay off the mortgage or refinance again before reaching that point, the refinance may be less attractive.
Break-even isn't the only consideration, especially when changing terms or taking cash out, but it is a useful starting point.
Watch the Loan Term
A lower payment doesn't necessarily mean a lower total cost.
If you've already spent years paying down your current mortgage and replace it with a new, longer-term mortgage, your monthly payment could fall while extending the amount of time you're paying interest.
Ask to compare different terms when appropriate.
The right comparison may be your current mortgage against:
A new longer-term mortgage
A shorter-term mortgage
A term closer to the remaining years on your current loan
Compare the Total Cost
Look beyond the advertised interest rate.
Compare:
Interest rate
APR
Discount points
Origination charges
Lender credits
Title and settlement costs
New loan amount
Amount financed into the new mortgage
Estimated payment
Break-even period
Remaining term versus new term
A refinance promoted as having "no closing costs" does not necessarily mean the transaction has no costs.
Depending on the structure, eligible costs may be offset through lender credits associated with the mortgage pricing rather than being paid directly out of pocket.
That can be useful in the right situation, but compare the complete structure.
My guide to finding the best mortgage rates in Charlotte explains how points, lender credits and APR affect mortgage comparisons.
Factor In Escrow
Escrow can make refinance cash-to-close figures look confusing.
If your new mortgage includes an escrow account, funds may be collected to establish the new account for future property-tax and homeowners-insurance payments.
Your previous servicer generally handles any remaining balance in your old escrow account after the existing mortgage is paid off, subject to applicable servicing requirements.
Because the new escrow funding and old escrow refund do not necessarily happen at the same time, make sure you understand how escrow affects the amount needed at closing.
Should You Refinance to Consolidate Debt?
A cash-out refinance can potentially be used to pay off higher-interest debt, but moving unsecured debt into a mortgage deserves careful thought.
Credit cards and other unsecured debts are not secured by your house.
A mortgage is.
Using home equity to consolidate debt can potentially change the interest rate, monthly obligations and repayment period, but it also converts that debt into an obligation secured by your home.
Consider:
The refinance costs
New mortgage balance
New loan term
Total interest over time
Whether the monthly savings actually improve your financial position
Whether the underlying debt is likely to build back up
A lower monthly obligation does not automatically mean the strategy costs less over the long run.
What to Expect During a Refinance
The exact process depends on the loan program and lender, but a typical refinance may look like this:
Set your goal and review your current mortgage. Look at your current rate, balance, remaining term, mortgage insurance and what you're trying to change.
Compare refinance options. Compare similar loan structures and review the rate, points, lender charges, credits and other costs.
Apply and provide documentation. The lender reviews the income, assets, credit and property information required for the selected program.
Decide when to lock. If you choose to lock, understand the rate, pricing, expiration date and applicable lock terms.
Complete the valuation requirement. Some refinances may qualify for an appraisal waiver or another permitted valuation method. Others require a new appraisal.
Underwriting and closing. The lender completes underwriting and required closing steps.
Right of rescission when applicable. For many non-purchase-money mortgages secured by a principal residence, federal law provides a three-business-day right to cancel after the applicable requirements have been satisfied.
The federal right of rescission does not apply to every refinance transaction, so review your closing disclosures and notices carefully.
Refinancing a Rental Property
Investment-property refinancing works differently from refinancing a primary residence.
Conventional investment-property refinances can have different loan-to-value limits, reserve requirements and pricing.
For investors, DSCR financing can also provide another refinance option.
Rather than qualifying primarily through personal employment income and debt-to-income ratio, a DSCR refinance generally focuses more heavily on the rental property's qualifying income compared with its applicable housing expense.
My guide to investment home loans in Charlotte covers conventional, DSCR and other investor financing options.
Common Refinance Mistakes
1. Focusing Only on the Rate
A lower rate accompanied by substantial points or other costs may not be the better financial choice.
Compare the whole mortgage.
2. Ignoring the Break-Even Point
If you're likely to move or refinance again relatively soon, determine whether you'll realistically recover the costs first.
3. Resetting the Clock Without Realizing It
A new, longer loan term can lower the payment while extending the amount of time you're paying interest.
4. Taking On New Debt During the Process
A new auto loan, credit card or other obligation can change your qualification.
Talk to your mortgage professional before taking on significant new debt while your refinance is in process.
5. Automatically Choosing Cash-Out Instead of a HELOC
If you already have favorable first-mortgage terms, replacing the entire mortgage just to access some equity may not be the only option.
Compare both.
6. Taking More Cash Than You Actually Need
More cash out generally means a larger new mortgage balance and less remaining home equity.
Determine how much you actually need before structuring the loan.
7. Relying on Generic Online Quotes
Online refinance calculators and advertisements may use assumptions that do not match your property, credit, equity, mortgage program or actual closing costs.
Compare real loan options using your actual scenario.
8. Waiting for the "Perfect" Rate
No one can reliably predict the exact direction of future mortgage rates.
Evaluate whether refinancing accomplishes your goal using the options available today rather than relying on a guaranteed future rate move.
Questions to Ask Before You Refinance
Before moving forward, ask:
What am I trying to accomplish with this refinance?
What are the relevant closing costs?
How much is being added to my new mortgage balance?
What is my approximate break-even period?
Am I extending my loan term?
How does the new term affect the long-term cost?
Could I remove PMI without refinancing?
If I need equity, should I compare a HELOC or home equity loan?
Are discount points included in this quote?
Is the interest rate locked?
What happens to my existing escrow balance?
Does this refinance still make sense based on how long I expect to keep the home and mortgage?
How I Help With Refinancing
I start with the goal rather than assuming every homeowner needs a new first mortgage.
First, we'll look at your current loan:
Current mortgage type
Interest rate
Approximate balance
Remaining term
Mortgage insurance
Available equity
What you're trying to accomplish
Then I can compare applicable refinance and home-equity options from the wholesale lenders I work with, including conventional and FHA programs when appropriate.
If you're looking for cash, we'll also talk through whether replacing your first mortgage makes sense or whether keeping it in place and using a second mortgage may be worth comparing.
For a rate-and-term refinance, I can show you the estimated costs, payment difference and approximate break-even point.
For a cash-out refinance, we'll look at the new mortgage balance and how much equity you're converting to cash.
The point isn't to refinance simply because you can.
If the numbers don't make sense yet, I'll tell you.
You can also read what past clients say on my reviews page.
Refinance FAQs
How Soon Can I Refinance After Buying a Home?
It depends on the mortgage program and type of refinance.
Cash-out, FHA Streamline, VA IRRRL and other refinance programs can have specific ownership, mortgage-age or payment-history requirements.
For example, current Fannie Mae cash-out rules generally require an existing first mortgage being paid off to be at least 12 months old, subject to stated exceptions.
Do not assume the waiting period for one refinance program applies to every refinance.
How Much Equity Do I Need to Refinance?
It depends on the loan program, property type, occupancy and whether you're doing a rate-and-term or cash-out refinance.
Cash-out refinances generally have lower maximum loan-to-value limits than some rate-and-term transactions.
For a conventional cash-out refinance on an eligible one-unit primary residence, current Fannie Mae guidelines generally permit up to 80% loan-to-value, subject to the complete eligibility requirements.
Does Refinancing Hurt My Credit?
Applying for a refinance can involve a hard credit inquiry, which can affect your credit score.
Credit-scoring models generally recognize mortgage rate shopping, but the applicable shopping window and treatment can vary by scoring model.
If you're comparing mortgage companies, do your shopping within a concentrated period rather than unnecessarily spreading inquiries over many months.
Can I Refinance With a Lower Credit Score?
Possibly.
Credit requirements depend on the mortgage program, lender and rest of the loan profile.
Your credit can also affect the pricing available to you.
Rather than assuming you qualify—or don't qualify—based on one score, review the complete scenario.
Do I Need an Appraisal to Refinance?
Not always.
Some conventional refinances may receive an appraisal waiver or another eligible valuation option.
FHA Streamline and VA IRRRL transactions can also have different appraisal requirements from standard refinances.
Whether an appraisal is required depends on the program, lender and transaction.
Can I Refinance an FHA Loan Into a Conventional Loan?
Potentially.
Some homeowners refinance from FHA into conventional financing to change the mortgage structure or potentially eliminate FHA mortgage insurance.
Whether it makes sense depends on your equity, credit, conventional qualification, refinance costs and current versus proposed financing.
Is a HELOC Better Than a Cash-Out Refinance?
Neither is automatically better.
A HELOC lets you keep your existing first mortgage while borrowing against available equity through a second lien.
A cash-out refinance replaces the existing first mortgage.
If your existing mortgage has terms you would prefer to keep, a HELOC can be worth comparing. If replacing the entire mortgage improves the overall financing structure, cash-out may be worth considering.
Compare both before deciding.
Should I Refinance for a Small Rate Drop?
Not based on the rate difference alone.
Look at the cost of obtaining the new mortgage, your monthly savings, break-even period, new term and how long you expect to keep the loan.
A smaller rate change with low costs can potentially make more sense than a larger rate change that requires substantial upfront expense.
Talk Through Your Refinance Options
If you own a home in North Carolina or South Carolina and want to know whether refinancing makes sense, I'm glad to review your current mortgage and compare the options available to me.
We can look at the reason you're considering a refinance, what it would cost, the estimated break-even point and whether another option—such as a HELOC—may fit the goal better.
Schedule a mortgage consultation or start your mortgage application.
Paul Mattos
Mortgage Broker | Refine Mortgage
Carolina Home Financing
NMLS# 2339069 | Licensed in NC and SC
Call or text: 980-221-4959
Email: paulm@refinemortgage.net
Refine Mortgage Inc. | NMLS# 2417960 | Equal Housing Lender
This article provides general educational information and is not a commitment to lend, a rate quote, an offer of specific credit terms, or tax or legal advice. Refinancing may increase the total interest paid over the life of the loan. Mortgage programs, pricing and guidelines can change. Qualification depends on the borrower, property, selected program and underwriting requirements. Not all applicants will qualify.
