Last updated April 12, 2026 by Tim Stacey, Stacey Solutions powered by Xpert Home Lending, Inc NMLS 2179191.

How Refinance Rates Compare to Purchase Rates

Refinance rates are generally close to purchase rates but can be slightly higher depending on the loan type and your specific situation. Cash-out refinances tend to carry a small premium over rate-and-term refinances because the lender takes on more risk when you’re pulling equity out of the home.

VA streamline refinances (IRRRLs) often have very competitive rates because the qualification is streamlined and the VA guaranty reduces lender risk. FHA streamline refinances work similarly. For conventional refinances, the rate you get depends heavily on your credit score, equity, and the current market environment.

The Break-Even Calculation

Every refinance has closing costs, typically ranging from $3,000 to $8,000 depending on the loan size and where you live. The break-even point is when your cumulative monthly savings exceed those costs. If refinancing saves you $200 per month and closing costs are $5,000, your break-even is 25 months.

If you plan to stay in the home and keep the loan past the break-even point, the refinance makes financial sense. If there’s a good chance you’ll sell or refinance again before then, the closing costs may not be worth it. I run this calculation for every client so the decision is based on real numbers.

Factors That Affect Your Refinance Rate

Your credit score is the most influential factor in the rate you’re offered. Borrowers above 740 get the best pricing. Scores between 680 and 740 pay a small premium. Below 680, the adjustments become more significant.

Your equity position matters too. A loan-to-value ratio of 60 percent or lower typically earns the best rates because it represents low risk to the lender. Higher LTV ratios, especially above 80 percent, come with rate adjustments and may require mortgage insurance. The type of property, whether it’s your primary residence, second home, or investment property, also affects pricing, with primary residences getting the best rates.

VA Refinance Options for Veterans

Veterans and active-duty service members near Travis Air Force Base have access to two VA refinance programs. The IRRRL is a streamline refinance for borrowers who already have a VA loan. It requires minimal paperwork, usually no appraisal, and can close in as little as two to three weeks. The funding fee is just 0.5 percent.

The VA cash-out refinance allows borrowing up to 100 percent of the home’s value and can be used to replace any existing loan type with a VA loan. It requires a full appraisal and income qualification but offers more flexible terms than conventional cash-out products. For veterans with a service-connected disability, the funding fee is waived entirely.

Rate-and-Term vs. Cash-Out Refinance

A rate-and-term refinance changes your interest rate, loan term, or both without adding to the balance beyond closing costs. This is the cleanest option when your goal is simply to lower your rate or switch from an adjustable to a fixed rate.

A cash-out refinance replaces your current loan with a larger one and gives you the difference in cash. This can be useful for debt consolidation, home improvements, or other large expenses. The rate on a cash-out refinance is slightly higher because of the increased loan amount and risk. I help homeowners in Solano County evaluate which option aligns with their goals and produces the best overall outcome.

Tips for Getting the Best Refinance Rate

Start by checking your credit report and addressing any errors or high balances. Paying down credit card debt before applying can improve your score and qualify you for better pricing. Get quotes from at least two or three lenders so you can compare rates and closing costs on equal footing using the standardized Loan Estimate form.

Consider the total cost of the refinance, not just the rate. A lender offering a slightly higher rate with lower closing costs may save you more money overall, especially if there’s any chance you’ll sell or refinance again within a few years. Timing matters too, but trying to catch the absolute bottom of the market is a gamble. If the numbers work today, it’s usually better to lock and move forward.

Frequently Asked Questions

How much can I save by refinancing?

Savings depend on how much your rate drops and your loan balance. Reducing your rate by 0.5 percent on a $400,000 loan saves roughly $130 per month, or about $47,000 over a 30-year term after factoring in closing costs.

Is it worth refinancing for a 0.5 percent rate drop?

Often yes, depending on your loan balance and closing costs. On larger loans, even a half-percent reduction creates meaningful monthly savings. Run the break-even calculation to see how long it takes to recoup the costs.

Can I refinance with less than 20 percent equity?

Yes. Conventional rate-and-term refinances are available with as little as 3 to 5 percent equity, though you may need mortgage insurance. FHA and VA refinances have their own equity requirements. Cash-out refinances typically require more equity.

How long does a refinance take to close?

Most refinances close in 30 to 45 days. VA streamline refinances can close in as little as two to three weeks. The timeline depends on the loan type, the lender’s workload, and how quickly you provide required documentation.

Should I refinance into a shorter term?

If you can afford the higher payment, a shorter term like 15 or 20 years comes with a lower rate and saves significantly on total interest. It’s a great option for homeowners who want to build equity faster and pay off their home sooner.

Let’s See What Refinancing Can Save You

Whether you’re looking to lower your rate, shorten your term, or tap into your equity, the right refinance can put real money back in your pocket. I help homeowners across Vacaville, Fairfield, and Solano County evaluate their options and find the refinance that makes the most sense. Reach out and let’s look at your numbers.