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Refinancing after your home value rises

When your home's value goes up, so does your equity, even if your balance hasn't changed much.

3 min read

Key takeaways

  • Rising value increases your equity, which can improve your refinance options.
  • With 20% equity, you can refinance to a conventional loan without PMI.
  • More equity often means better pricing, and it can make a shorter term or cash out possible.
  • A lender usually confirms the new value with an appraisal or an appraisal waiver.

Next step: See how much refinancing could save you

Why a higher value matters

Lenders look at how much you owe compared with what your home is worth. When the value rises, that ratio falls, and you look less risky to a lender. That can mean lower costs and more choices, even if your income and credit stay the same.

Values can rise from a strong local market, from improvements you've made or both. Either way, the equity belongs to you, and a refinance is one way to put it to work.

An example

Hypothetical example. Say you bought for $350,000 with 5% down, so you borrowed 95% of the price. Today the home is worth $430,000 and you owe $320,000. You now owe about 74% of the home's value, which means you have roughly 26% equity.

With that much equity, a refinance could remove PMI and may improve your pricing.

What more equity can do

  • Remove PMI, or FHA mortgage insurance by moving to a conventional loan
  • Qualify for better pricing on a new rate
  • Shorten your term to pay off sooner
  • Take cash out with a cash-out refinance
  • Borrow a lump sum with a fixed-rate home equity loan and keep your first mortgage

Cash out or home equity loan?

A cash-out refinance replaces your mortgage with a larger one, so it makes most sense when today's rates are close to or below yours. A home equity loan is a second loan that leaves your current mortgage and rate alone.

CapCenter's home equity loans are fixed-rate, from $50,000 to $250,000, on single-family primary residences and second homes. How much you can borrow depends on the loan type and purpose, and a loan consultant can tell you yours.

Check your value first

Start with our home value tool and your latest mortgage statement to estimate your equity. Then get a quote. The lender will confirm the value, usually with an appraisal, though some refinances qualify for a waiver.

Refinancing with CapCenter

CapCenter refinances and home equity loans come with ZERO Closing Costs (restrictions apply). When an appraisal is required and provided by an approved agent, it is covered too. You need a credit score of at least 620 for a CapCenter loan.

Frequently asked questions

Do I need an appraisal to use my new value?

Usually. The appraisal confirms the value the lender uses. Some refinances qualify for an appraisal waiver instead.

What if the appraisal comes in lower than I expect?

Your options may change. You might still refinance with less benefit, pay down principal or wait. Your loan consultant can walk you through it.

Can I ask my servicer to remove PMI instead?

Often, yes. Many servicers will review PMI based on current value with a new appraisal and a minimum time since closing. Ask yours for their rules.

Are there closing costs?

CapCenter refinances come with ZERO Closing Costs (restrictions apply). Escrow deposits and prepaid interest are not covered.

How much cash can I take out?

It depends on your equity, the loan type and your qualifications. A loan consultant can tell you your maximum.

Does a higher value raise my property taxes?

It can, depending on how and when your area reassesses. Rules vary by location, so check with your local tax office.

Should I refinance just because my value went up?

Not necessarily. A higher value helps most when it lets you drop mortgage insurance, improve your rate or reach a goal like cash for a project. Compare the new loan with your current one first.

For general information only. Program rules and limits vary. Not a commitment to lend. NMLS ID #67717.

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