Client Account Access

Welcome to a new series we’ve started at Greenway, where we will tackle topics that clients ask us about often. We’re calling it “Ask an Advisor.” If you have a question you’d like us to answer, reach out to xxx 

First up: Home Refinancing FAQs

With mortgage rates falling for the first time in years, we’re beginning to see refinancing opportunities for clients who purchased a home in the last few years. For historical context, while mortgage rates have “felt” high, they have remained below the 30-year average of 8.08%.  However, the rapid increase in rates from 2022 to 2025 created a significant discrepancy for recent homebuyers compared to those who purchased earlier. This has made homeownership more expensive for recent buyers, especially without a corresponding drop in prices.

In mid-September, mortgage rates fell to a level that makes refinancing a viable option for some clients. This decline is largely linked to a decreasing yield on the 10-year Treasury, which is loosely correlated with expectations for Federal Reserve interest rate cuts.

As clients have looked into refinancing, they've asked us a number of questions about the process. We'll address these Frequently Asked Questions below.

FAQs:

Q: When does it make sense to refinance?

The general rule of thumb is that it doesn’t make sense to refinance until rates are at least 1% below your current rate. While this is a good starting point, it's not a strict rule. We also consider closing costs, the time it takes to recoup those costs, and your expected time horizon for staying in your home.

For example, refinancing a $500,000 mortgage at 1% lower than your current rate could save you approximately $327 per month. If closing costs are around $4,000, it would take roughly 12 months to realize the benefit of the lower rate. For a $1,000,000 mortgage, the monthly savings would be closer to $650, and assuming the same closing costs, the recoup period would be 6 months.

Q: My lender quoted me for a 30-year traditional mortgage and a 7-year ARM. Which should I choose?

This is a great question! A 30-year traditional mortgage offers certainty about your interest rate for the life of the loan.

An ARM (Adjustable Rate Mortgage) typically offers a lower initial rate, but can move up or down after the initial term. So you trade a lower rate for some risk that you’ll pay higher interest in the future. For those who intend to sell and move within the initial term, an ARM is worth considering due to its lower rate. It’s critical to understand the caps (i.e. amount the rate can increase) defined in the loan terms. 

We’ve recommended traditional mortgages for some clients and ARMs for others. Our recommendations vary depending on a client’s financial position, goals and risk tolerance. 

Q: What fees are normal for a refinance?

In most cases, the refinancing process looks a lot like the initial mortgage process. Your lender should provide you with a statement laying out interest rate, loan term and loan amount.

They’ll also break out closing costs. This typically includes a Commitment fee, Appraisal fee, and fees for credit reports and employment verification. There are also fees that you can typically shop for, such as Lender’s Title Insurance and Recording Fees. Total fees will vary by market, but we’ve recently seen total closing fees in the $4-5k range. 

Q: How do I refinance? What documents and information will I need?

We like to get a gut check of rates on BankRate.com. To compare apples-to-apples, we look at rates without points. (Points = upfront fees!)

Many borrowers will refinance with their existing lender. However, we recommend getting a few quotes to have a better understanding of rates, closing costs and other terms.

You’ll need the same documents that were required when you took out your mortgage! Think pay stubs, W2s, and tax returns. You’ll probably be asked to provide a recent mortgage statement and a statement of your assets and liabilities. 

Q: Where will rates go from here?

We don’t know. Mortgage rates are most closely linked to the yield on the 10-year Treasury Note. We’ll consider the expectations forecast to help determine if any significant changes in rates are expected. While we consider forecast expectations for significant rate changes, these forecasts are often inaccurate. Last year, rates were expected to fall pretty significantly all throughout the year. We didn’t see that – we actually saw rates increase! So while it’s helpful to know what others expect, the more important consideration is to understand how refinancing impacts on your own financial plan.

Q: Are there any other items I should look out for?

Yes! Three things come to mind:

Points upfront: Lenders may draw you in with a below-market rate. Many times, this rate includes “points upfront,” which are essentially fees paid at closing to buy down your rate. It’s important to compare rates without these points.

Increased loan balance: Many lenders will roll your closing costs into your new loan balance. So while your interest rate is lower, your total loan balance is higher. 

Resetting loan term: If you refinance into a new 30-year mortgage, your monthly payments will reset for 30 years. If you’ve already paid on your loan for a number of years, then you should understand how resetting your term will impact the total amount of interest you pay over the time of paying off your home. You may be trading lower monthly payments for higher total interest.

If you’re considering a refinance, we’re happy to review your quotes and help you understand the total impact on your overall financial plan.