Refinancing your mortgage in Seattle makes sense when the savings or the goal clearly outweigh the cost. Homeowners refinance to lower their payment, shorten their term, drop mortgage insurance, switch from an adjustable rate to a fixed one, or take cash out, and closing costs typically run 2% to 5% of the loan amount.
I have spent more than 25 years helping Puget Sound homeowners decide whether a refinance is worth it, and sometimes the answer is no. Here is how I think it through with clients, so you can run the same math before you talk to anyone.
Why Refinance Your Mortgage?
- Lower your rate and payment. The most common reason. A lower rate reduces your monthly payment and the interest you pay over the life of the loan.
- Shorten your term. Moving from a 30-year to a 20- or 15-year loan builds equity faster and usually lowers total interest, though the monthly payment often rises.
- Drop mortgage insurance. If your home has gained value, refinancing an FHA loan into a conventional loan, or replacing a conventional loan with PMI, can remove that monthly cost.
- Switch from an adjustable rate. Locking in a fixed rate before an ARM adjusts trades some uncertainty for a predictable payment.
- Take cash out. Use home equity for a remodel, an ADU, college costs, or paying off higher-interest debt.
- Change who is on the loan. After a divorce or a family change, a refinance can remove a co-borrower and settle equity.
- Combine a first mortgage and a HELOC. Rolling a variable-rate line into one fixed loan can simplify payments.
Types of Mortgage Refinance
| Refinance type | Best for | Key rule |
|---|---|---|
| Rate-and-term (conventional) | Lowering the rate or changing the term | PMI applies if you have less than 20% equity |
| Cash-out (conventional) | Tapping equity with one new loan | Up to 80% of value on a one-unit primary home |
| FHA streamline | Current FHA borrowers lowering their rate | At least 210 days and six payments; usually no appraisal |
| FHA cash-out | Equity access with more flexible credit | Up to 80% of value; FHA mortgage insurance applies |
| VA IRRRL (streamline) | Current VA borrowers lowering their rate | 0.5% funding fee; costs recouped within 36 months |
| VA cash-out | Eligible veterans, from any loan type | Up to 100% of value; 2.15% fee first use, 3.3% after |
| Jumbo refinance | Loans above $1,063,750 in King and Snohomish | Lender-specific equity, credit, and reserve rules |
Veterans can read more in my VA refinance guide, and jumbo homeowners in my jumbo refinance guide.
What Does It Cost to Refinance in Washington?
Refinance costs typically run 2% to 5% of the loan amount. They include lender fees, the appraisal (unless you qualify for a waiver), title insurance, escrow, and recording, plus prepaid interest and a fresh escrow account for taxes and insurance. One piece of good news: Washington's real estate excise tax applies to sales, not refinances.
You usually have three ways to handle costs: pay them at closing, roll them into the new loan, or accept a slightly higher rate in exchange for a lender credit. Each changes your break-even point, so compare them on actual Loan Estimates, side by side, for the same loan amount and lock period.
The Break-Even Math
Divide your total refinance costs by your monthly savings. As an illustrative example, $6,000 in costs and $250 a month in savings means you break even in 24 months. If you expect to stay in the home well past that point, the refinance likely pays for itself. If you might sell sooner, it may not. This example is illustrative only; your actual numbers depend on a full loan estimate.
For a cash-out refinance, the math is different. Compare the new rate on your whole balance with the cost of the alternatives, such as a home equity line of credit that leaves your current first mortgage in place. I break that comparison down in HELOC vs cash-out refinance.
Removing Mortgage Insurance
On a conventional loan, you can ask your servicer to cancel PMI once your balance reaches 80% of the home's original value, and it ends automatically at 78%. Many Seattle-area homes have gained value since purchase, so some lenders will also remove PMI based on a new appraisal without a refinance at all.
FHA is different. With less than 10% down at purchase, FHA mortgage insurance lasts for the life of the loan, so refinancing into a conventional loan once you have about 20% equity is usually the way to remove it.
Refinancing for Seattle Tech Professionals
For Amazon, Microsoft, and other tech employees, a cash-out refinance can fund a remodel or a new home without selling stock. RSU income can count toward qualifying once there is a reliable vesting history, and vested shares can help with reserves. This is not tax advice, so talk to a tax professional before deciding between selling shares and borrowing against your home.
The Refinance Process and Timeline
- Set the goal. Lower payment, shorter term, cash out, or removing mortgage insurance. The goal decides the loan type.
- Compare Loan Estimates. Look at rate, points, lender credits, and total costs together.
- Apply and lock. Provide income, asset, and mortgage statements, then lock when the numbers work.
- Appraisal and underwriting. Some refinances qualify for an appraisal waiver; streamline loans often skip it.
- Sign and wait out the rescission period. For most refinances of a primary home, you have three business days after signing to cancel before the loan funds.
Related reading: paying off your mortgage early, what one extra payment a year saves, and financing a home in Seattle.
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Seattle Mortgage Refinance: FAQs
When does it make sense to refinance my mortgage?
When the monthly savings repay your closing costs well before you expect to sell or refinance again, or when you have a clear goal such as removing mortgage insurance, shortening your term, or funding a project with cash out. Divide total costs by monthly savings to find your break-even point.
How much does it cost to refinance in Seattle?
Refinance costs typically run 2% to 5% of the loan amount, including lender fees, appraisal, title, escrow, and recording, plus prepaid interest and escrow reserves. Washington's real estate excise tax does not apply to refinances.
How much cash can I take out with a refinance?
A conventional or FHA cash-out refinance on a primary home typically allows a new loan of up to 80% of the home's value. Eligible veterans can borrow up to 100% of value with a VA cash-out refinance, though some lenders set lower limits.
Can I refinance to remove PMI or FHA mortgage insurance?
Yes. Conventional PMI can often be removed without refinancing once you reach 20% equity, and it ends automatically at 78% of the original value. FHA mortgage insurance usually lasts for the life of the loan, so refinancing into a conventional loan at about 20% equity is the common way to remove it.
How long does a refinance take?
Most refinances take a few weeks from application to closing, depending on the appraisal and how quickly documents come in. Streamline refinances that skip the appraisal can move faster. For most refinances of a primary home, there is also a three-business-day waiting period after signing before the loan funds.
Is a cash-out refinance or a HELOC better?
If your current first mortgage has a low rate, a HELOC often costs less because it leaves that loan in place. A cash-out refinance can make more sense when the new rate is close to your current one or you want one fixed payment. Compare both on actual numbers before deciding.
Let's connect. Call or text (206) 601-3426, email keith@mortgagereel.com, start your application, or book a time to talk. I will run your break-even before you decide anything, pressure-free.