Refinancing your mortgage is a big deal. Before you pay off your current mortgage and take on a new loan, you should know the answers to the most common questions.

Question: What are the different types of refinance options?

Answer: You have two main refinance options:

– Rate/term refinance – You refinance to change the rate or the term on your loan. A common example is refinancing from a 30-year term to a 15-year term. You may also keep the same term, but get a lower interest rate.

– Cash-out refinance – You borrow against your home’s equity. Rather than borrowing just the outstanding principal balance, you borrow the balance plus the amount you want to withdraw from the equity (up to the loan’s maximum allowance).

Question: Should I pay points to lower my rate?

Answer: Paying points upfront can help you secure a lower interest rate. Only you know if it makes financial sense to do so. Keep in mind, though, that the IRS only allows you to deduct a portion of the points that you pay. If you take a 30-year term, for example, you may only write off 1/30 th of the points paid each year.

Question: How long do I have to wait to refinance?

Answer: Each loan program is different, but in general, you must wait at least six months before you refinance. If you want to take equity out of the home, you may need to wait longer until you pay more of the principal balance down and/or the home appreciates.

Question: Can I refinance a loan with no closing costs?

Answer: Yes, there are chances to refinance without paying closing costs with a no closing cost loan. Lenders charge a slightly higher interest rate for this option, but you don’t have to bring as much cash to the closing. This is often a good option for homeowners that plan to stay in the home long-term.

Question: How much does it cost to refinance?

Answer: The actual refinancing costs vary by lender and loan program, but most borrowers pay between 2% and 4% of the loan amount for each refinance.

Question: What credit score do you need to refinance?

Answer: Each loan program has its minimum credit scores, but you can find programs with a credit score as low as 580 (FHA loans) or as high as 680 minimum credit score requirements (conventional loans), as well as requirements that fall somewhere in between.

Question: Can I wrap the closing costs into my mortgage?

Answer: Some lenders/loan programs do allow you to wrap your closing costs into your loan, but you have to have the equity in the home to do so. If you have the room and still meet the maximum loan-to- value requirements, you may wrap your costs into the loan.

Refinancing your mortgage may help you save money or get access to cash for large expenses, such as college tuition or renovating your home. Make sure your refinance program helps you achieve your goals while providing an affordable payment now and in the long run.