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Are you ruminating about a refi? How long you must wait to refinance depends on the kind of mortgage you have and whether you want cash out.

You can typically refinance a conventional loan as soon as you want to, but you’ll have to wait six months to apply for a cash-out refinance.

The wait to refinance an FHA, VA, or USDA loan ranges from six to 12 months.

Before any mortgage refinance, homeowners will want to ask themselves: What will the monthly and lifetime savings be? What are the closing costs, and how long will it take to recover them? If I’m pulling cash out, is the refinance worth it?

Refinance Wait Time Based on Mortgage Type

How soon can you refinance? The rules differ by home loan type and whether you’re aiming for a rate-and-term refinance or a cash-out refinance.

A rate-and-term refi will change your current mortgage’s interest rate, repayment term, or both. Cash-out refinancing replaces your current mortgage with a larger home loan, allowing you to take advantage of the equity you’ve built up in your home through your monthly principal payments and appreciation.

Conventional Loan Refinance Rules

If you have a conventional loan, a mortgage that is not insured by the federal government, you may refinance right after a home purchase or a previous refinance — but likely with a different lender.

Many lenders have a six-month “seasoning” period before a borrower can refinance with them. So you’ll probably have to wait if you want to refi with your current lender.

Cash-Out Refinance Rules

If you’re aiming for a cash-out refinance, you normally have to wait six months before refinancing, regardless of the type of mortgage you have.

FHA Loan Refinance Rules

An FHA Streamline Refinance reduces the time and documentation associated with a refinance, so you can get a lower rate faster.

But you will have to wait 210 days before using a Streamline Refinance to replace your current mortgage.

VA Loan Refinance Rules

When it comes to VA loans, the Department of Veterans Affairs offers an Interest Rate Reduction Refinance Loan (IRRRL), also known as a “streamline” refinance.

It also offers a cash-out refinance for up to a 100% loan-to-value ratio, although lenders may not permit borrowing up to 100% of the home’s value.

The VA requires you to wait 210 days between each refinance. Some lenders that issue VA loans have their own waiting period of up to 12 months. If so, another lender might let you refinance earlier.

USDA Loan Refinance Rules

The Streamlined-Assist refinance program provides USDA direct and guaranteed home loan borrowers with low or no equity the opportunity to refinance for more affordable payment terms.

Borrowers of USDA loans typically need to have had the loan for at least a year before refinancing. But a refinance of a USDA loan to a conventional loan may happen sooner.

Jumbo Loan Refinance Rules

For a jumbo loan, even a rate change of 0.5% may result in significant savings and a shorter time to break even.

How soon can you refinance a jumbo loan? A borrower can refinance their jumbo mortgage at any time if they find a lender willing to do so.

Top Reasons People Refinance a Mortgage

If you have sufficient equity in your home, typically at least 20%, you may apply for a refinance of your mortgage. Lenders will also look at your credit score, debt-to-income ratio, and employment.

If you have less than 20% equity but good credit — a minimum FICO® score of 670 — you may be able to refinance, although you may not receive the best rate available or you may be required to pay for mortgage insurance.

Here are the main reasons borrowers look to refinance.

•   Reduce the interest rate. Reduce the interest rate. Refinancing to a loan with a lower rate is the point of refinancing for most homeowners. Just calculate your break-even point, when the closing costs will have been recouped: Divide the closing costs by the amount to be saved every month. If closing costs will be $5,000 and you’ll save $100 a month, it will take 50 months to break even and begin reaping the benefits of a refi. If you purchased your home around 2020, it may be hard to capture a lower interest rate than you currently have, as that was a particularly low time for historical mortgage rates.

•   Shorten the loan term. Refinancing from a 30-year mortgage to a 15-year loan usually results in a substantial amount of loan interest saved, as this mortgage calculator shows. Or you may refi to a 20-year term. If you’re years into your mortgage, resetting to a new 30-year term may not pay off.

•   Tap home equity. Here’s how cash-out refinancing works: You apply for a new mortgage that will pay off your existing mortgage and give you a lump sum. A lower interest rate may be available at the same time.

•   Shed FHA mortgage insurance. In many cases, the only way to get rid of mortgage insurance premiums on an FHA loan is to sell your home or refinance the mortgage to a conventional loan when you have 20% equity in the home — in other words, when your new loan balance would be at least 20% less than your current home value.

•   Switch to an adjustable-rate mortgage or from an ARM to a fixed-rate loan. Depending on the rate environment and how long you expect to keep the mortgage or home, refinancing a fixed-rate mortgage to an ARM that has a low introductory rate, or an ARM to a fixed-rate loan, may make sense.

Mortgage rates are no longer at record lows. But they’re still pretty low by historical mortgage rate standards.

And rates are not the be-all, end-all. Home equity increased for many homeowners as home values rose. That’s attractive if you want to tap your equity with a cash-out refinance.

Closing costs can often be rolled into the loan or exchanged for an increased interest rate with a no-closing-cost refinance.

The Takeaway

How soon can you refinance? If it’s a conventional loan, whenever you want to, although probably not with the same lender within six months. Otherwise, if you must bide your time before refinancing or you’re waiting for rates to abate, that gives you a lull to decide whether a traditional refinance or cash-out refi might suit your needs.

SoFi can help you save money when you refinance your mortgage. Plus, we make sure the process is as stress-free and transparent as possible. SoFi offers competitive fixed rates on a traditional mortgage refinance or cash-out refinance.

FAQ

Do you need 20% equity to refinance?

Some lenders will allow you to refinance with less than 20% equity in your home, but you may not get the best available interest rate, or you may need to pay for private mortgage insurance. You’ll want to do the math to make sure you’re saving money with the refinance.

Does refinancing hurt your credit score?

There may be a temporary dip in your credit score after a refinance, but if refinancing helps you lower your monthly debts you may find that it is actually helpful to your credit score over the long term.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

^¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
^†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.

SOHL-Q424-126

If you’re financing your home purchase, choosing the right lender could streamline the process. But there are many types of mortgage lenders: retail lenders, direct lenders, online lenders, and others.

Although many steps of the mortgage process are consistent across lenders, there are key differences that could affect the all-in cost. To help narrow your search, this guide will cover what mortgage lenders do and explore common mortgage lenders.

Mortgage Lender, Defined

A mortgage lender is a bank, credit union, mortgage company, or individual that grants home loans to borrowers. Mortgage lenders evaluate an applicant’s creditworthiness and ability to repay the loan. Based on the buyer’s qualifications, the lender sets the interest rate and mortgage term.

After closing, the loan may be managed by a mortgage servicer. The mortgage servicer vs. lender difference is that the mortgage servicer is responsible for sending statements, collecting monthly payments, and allocating funds between the loan principal, interest, and escrow account, while the lender is loaning you money.

It’s possible that financial institutions act as both the mortgage lender and mortgage servicer.

Mortgage Lender vs. Mortgage Broker

Both lenders and mortgage brokers can assist with the purchase of a home. But there are key differences to understand when comparing a mortgage broker vs. direct lender.

Mortgage brokers do not originate or approve loans; rather, they help borrowers find a home loan that best fits their financial situation. They often have connections with many lenders and find solutions for less-qualified borrowers. A mortgage broker also helps organize required paperwork and manages communication between the borrower and lender.

A mortgage broker earns a commission for these services from either the borrower or lender after the loan closes. Licensing is required to be a mortgage broker, and the Nationwide Mortgage Licensing System & Registry maintains a database of licensed professionals by state. Search for NMLS consumer access.

You can always obtain loan quotes from at least one broker and one direct lender when you shop for a mortgage.

Online Mortgage Lender vs. Bank

Borrowers can work with a bank or mortgage lender to fund their home purchase.

Banks can offer mortgages along with other financial products, including checking accounts and commercial loans. A borrower may receive benefits, like a lower rate and lower closing costs, when applying for a bank mortgage if they’re an existing customer. As larger financial institutions, banks tend to use a mortgage servicer for their mortgage loans after closing.

As larger financial institutions, banks tend to service their mortgage loans after closing.

On the other hand, banks may have stricter lending requirements than mortgage companies, thanks to federal regulation and compliance. Borrowers may also have fewer loan options to choose from with a bank, as a mortgage lender specializes in mortgage products.

Common Mortgage Lender Options

If you’re in the market for a home loan, there are several types of mortgage lenders and terms to become familiar with. Here are the most common.

Direct Lenders

Direct lenders like mortgage lenders, banks, credit unions, and portfolio lenders fund, originate, underwrite, process, and close the loans on their own. They work directly with buyers and refinancers; there is no broker involved.

They work directly with buyers and refinancers; there is no broker involved.

Retail Lenders

Banks, credit unions, and mortgage companies can also be categorized as retail lenders. Retail lenders issue mortgages directly to consumers.

Homebuyers may receive more personalized assistance from a mortgage loan originator to find a home loan that fits their situation. But because retail lenders handle loans in-house, they generally only offer their own loan products.

Besides mortgages, retail lenders provide other credit products, including savings accounts, personal loans, and credit cards.

Wholesale Lenders

Wholesale lenders offer home loans through third parties, such as retail lenders or mortgage brokers, instead of directly to consumers. They fund the mortgage and set the loan terms, while the third party facilitates the application process and communicates with the borrower. After closing, wholesale lenders typically sell their home loans on the secondary mortgage market.

Portfolio Lenders

A portfolio lender, such as a community bank, uses its own money to originate nonconforming mortgages — those that do not meet Fannie and Freddie standards for purchase, such as jumbo loans. A portfolio lender has more flexible lending standards than a conventional direct lender because it holds its own home loans in a portfolio. But portfolio loans may come with higher interest rates and closing costs.

Warehouse Lenders

Warehouse lending provides short-term funding to mortgage lenders to finance a home loan. The mortgage serves as collateral until the lender — often a small or midsize bank — repays the warehouse lender. With warehouse lending, the mortgage lender is responsible for the loan application and approval process. After closing, the mortgage lender sells the loan on the secondary market and uses the proceeds to repay the wholesale lender. Mortgage lenders profit from this practice through origination fees and mortgage points.

A mortgage financed through a warehouse lender may provide faster funding and more flexibility than a conventional loan. For instance, borrowers could apply for construction financing with warehouse lending.

Online Lenders

With an online lender, the mortgage application process, processing, underwriting, and closing can all be completed virtually. Opting for a digital borrowing experience can get you to the closing table faster. No overhead means online lenders can offer lower rates and fees. On the other hand, borrowers may find it more difficult to build a working relationship with a loan officer when completing the process online.

Recommended: Prequalification vs. Preapproval: What’s the Difference?

Hard Money Lenders

Hard money lenders — individuals or private companies — offer hard money personal loans based on the value of the property rather than the borrower’s creditworthiness. The property serves as collateral, and borrowers must repay the loan in just a few years.

While hard money lenders can offer faster financing, these loans usually come with higher down payment requirements and interest rates because of their risk. Borrowers may benefit from a hard money lender if they plan to flip a property.

How to Find the Right Mortgage Lender for You

While there’s no shortage of lenders, finding the right mortgage lender takes some shopping around.

When browsing options, it’s useful to consider your financial situation and needs. For instance, can you afford a down payment on your own or with help from a family member or friend? Is your credit score high enough to buy a house?

Checking the fees and interest rate are important to determine how much you’ll have to pay upfront and over the life of the loan.

Applying to several lenders and/or working with a mortgage broker can let you compare rates and fees to negotiate better terms. Apply to all within a 14-day window to minimize damage to your credit score.

There are first-time homebuyer programs, too. The definition of first-time homebuyer is broader than it seems. It includes anyone who has not owned a principal residence in the past three years.

Recommended: Mortgage Loan Help Center

The Takeaway

There are many types of mortgage lenders to choose from. Your financial situation and goals will help you pick the mortgage lender that offers terms that fit your budget.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

FAQ

What does a mortgage lender do?

A mortgage lender offers home loans to borrowers with the expectation that the loans will be repaid with interest. They set the loan terms, including the interest rate and repayment schedule.

Are mortgage underwriters the same as the lender?

Underwriters assess a borrower’s income, assets, and debt to determine whether they are approved for a mortgage. Most lenders manage the underwriting process in-house.

Photo credit: iStock/luismmolina

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

SOHL-Q424-146

If you get paperless mortgage statements or have autopay set up on your home loan, or even if you get statements in the mail, it might be easy to miss important information.

By paying close attention to exactly what’s included in your mortgage statements, you’ll avoid unpleasant surprises.

What Is a Mortgage Statement?

You probably became well versed on mortgage basics during the homebuying process. And you likely did the hard work of using a home mortgage calculator, qualifying for a mortgage, and getting that loan.

Now comes the mortgage statement, a document that comes from your home mortgage loan servicer. It typically is sent every month and includes how much you owe, the due date, the interest rate, and any fees and charges.

In the past, the information that was included and the format of a mortgage statement ran the gamut among lenders. Thanks to the Dodd-Frank Act, enacted in 2010, mortgage servicers must include specific loan information and follow a uniform model for mortgage statements.

Statements also include information on any late payments, how much you’ll need to pay to bring your balance into the black, and any late fees you’re dinged with. You can also find customer service information on your mortgage statement.

What Does a Mortgage Statement Look Like?

A mortgage statement has similar elements as a credit card or personal loan statement. As a picture is worth a thousand words, here’s a sample mortgage statement, courtesy of the Consumer Financial Protection Bureau:

What Is on a Mortgage Statement?

Deciphering what’s on a mortgage statement can help you know what to look for, how much you owe in a given month, how much you’re paying toward interest and principal, and how much you’ve paid year to date.

Let’s dig into all the different parts of a home loan statement.

Amount Due

This usually can be found at the top of your mortgage statement and is how much you owe for that month. Besides the amount, you’ll find the due date and, usually, the late fee you’ll get hit with should you be late on payment.

Explanation of Amount Due

This section breaks down why you owe what you owe. You’ll find the principal amount, the interest amount, escrow for taxes and insurance, and any fees charged. All of those will be tallied for a total of what you’ll owe that month.

Past Payment Breakdown

Below the section that explains the amount due, you’ll find a breakdown of your past payment: the date the payment was made, the amount, and a short description that may include late fees or penalties and transaction history.

Contact Information

This is typically located on the top left corner of the mortgage statement and contains your mortgage loan servicer address, email, and phone number should you need to speak to a customer service representative. Note that like student loan servicers, a mortgage loan servicer might be different from your lender.

Your mortgage loan servicer processes payments, answers questions, and keeps tabs on your loan payments, and how much has been paid on principal and interest.

You probably know what escrow is. If you have an escrow account, your mortgage loan servicer is tasked with managing the account.

Account Information

Your account information includes your account number, name, and address.

Delinquency Information

If you’re late on a mortgage payment, within 45 days you’ll receive a notice of delinquency, which might be included on your mortgage statement or be a separate document. You’ll find the date you fell delinquent, your account history, and the balance due to bring you back into good standing.

There might be other information such as costs and risks should you remain delinquent. There also might be options to avoid foreclosure. One possible tactic is mortgage forbearance, when a lender agrees to stop or reduce payments for a short time.

Recommended: Refinance Your Mortgage and Save

Understanding the Details

Your mortgage statement includes many details, all to help you understand what you’re paying in interest, the fees involved, and what your principal and interest amounts are. It’s important to look at everything to make sure you understand what information is included. If you have trouble deciphering the information, call your mortgage servicer listed on the document.

If you have an adjustable-rate mortgage, the mortgage statement also might include information about when that interest rate might change.

Important Features to Know

Besides the main parts of a mortgage statement, here are a few other key elements of a mortgage statement.

Delinquency Notice

As mentioned, you’ll receive a delinquency notice within 45 days should you fall behind on payments. Besides how much you owe to get back in good standing, the delinquency notice might also include your account history, recent transactions, and options to avoid foreclosure.

Escrow Balance

If you have an escrow account for your mortgage, the balance will show how much you owe in homeowners insurance and property taxes.

Note that this is different from how much money you have in your escrow account and how much money is collected, which is typically included in your annual escrow statement.

If you don’t have an escrow account, your taxes and homeowners insurance owed will usually be separate lines.

Recommended: Mortgage Calculator with Taxes and Insurance

Using Your Mortgage Statement

Now that we’ve covered all the elements of a mortgage statement, let’s go over how to use your mortgage statement and make the most of it.

Making Sure Everything Is in Order

Comb through your mortgage statement and make sure everything is accurate and up to date. Inaccurate information can lead to overpaying, potentially falling behind on payments, and headaches.

Keeping Annual Mortgage Statements

While you might not need to hold on to your monthly mortgage statements for too long, make sure you have access to your annual mortgage statements for a longer period of time. In case you run into an IRS audit, you’ll be required to provide documentation for the past three years.

Making Your Payment

There are a handful of ways you can make payments on your mortgage.

Online. This is probably the most common and simplest way to submit a mortgage payment. It’s free, and once you set up an account online and link a bank account to draw payments from, you’re set. You can also set up autopay, which will ensure that you make on-time payments. In some cases, you might be able to get a discount for setting up auto-debit.

Coupon book. A mortgage servicer might send you a coupon book to use to make payments instead of sending mortgage statements. A coupon book has payment slips to include with payments. The slips offer limited information.

Check in the mail. As with any other bill, you can write a check and drop it in the mail. However, sending a payment by snail mail might mean that your payment doesn’t arrive on time. If you are going this route, send payments early and consider sending them via certified mail.

How Long Should You Keep Mortgage Statements and Documents?

Just as you’d want to hold on to billing statements for other expenses, you’ll want to keep your mortgage statements in case you find inaccuracies down the line. Plus, the statements come in handy for tax purposes and for your personal accounting.

So how long should you keep your mortgage statements? Provided you can find your statements online by logging in to your account, you don’t need to hold on to paper statements for long. In fact, you can probably get rid of paper copies if you have access to them online. It might be a good idea to download the documents to your computer.

Other documents, such as your deed, deed of trust, promissory note, purchase contract, seller disclosures, and home inspection report, you should keep as long as you own the home.

Consider holding on to annual mortgage statements for several years, and in a safe place. It’s a good idea to store them on your computer and have hard copies on hand.

The Takeaway

It’s easy to gloss over mortgage statements, but not knowing what’s in them every month and not noticing any changes can result in costly mistakes. It’s also eye-opening to see how much of a payment goes to principal and how much to interest. Having that information at hand can also be helpful if you are considering a mortgage refinance.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

FAQ

How do I get my mortgage statement?

You should receive a statement monthly, either in the mail or via an alert from your mortgage servicer saying the bill is due. If you don’t receive a statement and can’t access it online, contact your lender promptly.

What is a mortgage servicer?

A mortgage servicer is a company that manages home loans. They send your statement and collect and process your payment every month, as well as provide customer support. A mortgage servicer may be different from your lender, which is the institution that approved your application and loaned you the funds to buy your property.

Photo credit: iStock/Tijana Simic

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

SOHL-Q424-118

If you want to sell your home fast and for the highest possible price, you may find that it helps to thoughtfully stage it with potential buyers in mind.

Even in a hot real estate market, staging can be a useful tool. First impressions can be critical as buyers must decide quickly how much to offer or whether to make an offer at all.

A 2023 report from the National Association of Realtors® (NAR) found that 81% of buyers’ agents said staging made it easier for their buyers to visualize a property as their future home.

What Is Home Staging?

Staging your home to sell typically involves cleaning, decluttering, and rearranging furniture — or even replacing your current decor with rented or borrowed pieces that can better showcase the home.

It’s all about making your home as appealing as possible to attract buyers, minimize the amount of time it takes to sell, and maximize your return — goals that can be especially important if you’re trying to buy and sell simultaneously.

How Home Staging Can Affect Time and Price

It’s hard to predict exactly how staging will affect any particular home sale, but here are some factors to consider.

Research Shows Benefits for Sellers

Twenty percent of the buyers’ and sellers’ agents who responded to the NAR survey said staging increased the dollar value offered between 1% and 5% compared with similar nonstaged homes on the market. And 27% reported that staging a home for sale slightly decreased the amount of time the home was on the market.

You Have Competition

As soon as you list your home for sale — whether you’re selling traditionally or with owner financing — you start competing with every other house in the neighborhood and the surrounding area. Depending on that competition, as well as your goals for getting the house sold and locking in a new home loan and buying a new home, staging could be a worthwhile strategy for making your home stand out.

Recommended: 2024 Home Loans Education Portal

Expectations Can Be High

Decor in TV shows may set high expectations among some buyers for what your house should look like. Ten percent of the NAR 2023 Profile of Home Staging respondents said buyers were disappointed by how homes they looked at compared with homes they saw on TV.

Should You Hire a Professional Stager?

While some parts of the home staging process may be easy to DIY (paring down the number of personal photos and knickknacks, for example), it may help to hire a professional.

An experienced home stager will likely have more insight into what buyers in your area are looking for and what the current home trends are. A professional also may have access to furniture, art, and other décor items that could transform your home for a quick and/or more lucrative sale. And the amount you get for your current home could directly affect how much you can spend on your next one.

Here are some things to consider when deciding whether or not to hire a home stager.

Cost

Professional home staging can cost hundreds or even thousands of dollars, depending on how much work the stager does, how big your house is, whether you decide to rent staging furniture, and how long the house is on the market. There are ways you might be able to cut the expense, however, including:

•  Meeting with the pro to do a walk-through and consultation on how to stage your home to sell, but then doing the work yourself.

•  Asking the stager to work with your furniture instead of using rented items. (This could also save on storage costs.)

•  Focusing on a few important spaces, such as the entryway, the living room, and the master bedroom, instead of reworking your entire home.

Recommended: Home Mortgage Calculator

Fresh Eyes and Objectivity

Of course, you love your family photos, the tchotchkes you’ve collected through the years, and the paint colors you’ve chosen for every room. Buyers, however, might not.

An experienced stager can walk through and objectively point to the things that might need to be put away, cleaned, moved around, or refreshed before the house is photographed for the listing or has its first showing. A professional also may have home-staging tips to help you market to the types of buyers most often found in your area, whether that’s growing families who are upsizing or baby boomers who are downsizing their home.

Living With Someone Else’s ‘Look’

Stagers are trained to give the homes they work on the kind of polished, cohesive look buyers are used to seeing on HGTV. But living in a home that’s been styled for others may be a bit nerve-wracking. And if the furniture is not your own, you may have to keep kids, pets, and glasses of red wine away to avoid any damage.

Exposing Bigger Problems

Moving furniture around to create a more open look could also create some problems, if, for example, those changes expose a crack in the wall or a stain on the carpet. Making those fixes may delay getting your home on the market.

Pros and Cons of Hiring a Professional Home Stager

12 Tips for Home Staging Success

Whether you decide to hire a helper or do the work yourself, here’s a list of home staging ideas to keep in mind.

1. Clear the Clutter

Clutter is distracting and it takes up space. As soon as you hire a real estate agent, they’ll likely nudge you to sell, donate, or throw away anything you no longer use. Things you want to keep but won’t need for a while (seasonal clothing and sports equipment, photo albums and keepsakes, or books you hope to read someday), can be boxed up and stored until you move. But remember: Buyers will want to assess your closet space, so you may want to move those boxes to the basement or rent a storage space.

2. Depersonalize

Framed family photos, souvenirs, your kids’ artwork, and other personal items can get in the way when buyers try to envision themselves living in your home. Even the day-to-day stuff can divert attention from the illusion you’re trying to create. That means no shoes by the front door, no wet towels in the hamper, and trying to keep bathroom counters clear of everything but hand soap and guest towels.

3. Deep Clean

Neat and tidy is good, but crisp and gleaming is better. A clean house sends a message to buyers that you take good care of your home and have likely also been on top of house maintenance. If your place isn’t new, you still can try to make it look as new as possible. Shine up all the appliances. Scrub the sinks, tubs, floors, and toilets. Check the corners for cobwebs and the baseboards for dog hair. And don’t forget to dust the ceiling fans and bathroom exhaust fans. If you don’t have the time or energy to do it yourself, you may want to hire a cleaning service — or double up on the service you already have.

4. Repair All Damage

You know all those little dings, stains, and scuff marks you’ve become blind to? They can be a big turnoff for buyers — who will definitely see them. Why not do a thorough walk-through and make a list of required touch-ups and repairs (and repair costs)? Then you can head to the home improvement store, get what you need to make the fixes, and get to work. And if something is beyond your skillset (a running toilet, broken appliance, or finicky fireplace), you can address it before buyers come through. Find all the help you need in a list of homeownership resources.

5. Focus on Essential Rooms

If you have a limited staging budget, you may want to focus on the rooms buyers tend to prioritize. Respondents to the NAR survey said staging the living room was most important to homebuyers, followed by the primary bedroom and kitchen. And home offices may be gaining importance as more people are working from home: 46% of the survey’s respondents said they had staged a home office.

6. Neutralize the Decor

Decorating with neutrals — think 50 shades of gray — can be another big step toward depersonalizing your home. Your favorite colors may be bright and bold, but that might be a bit much for some buyers. (Their agent probably will tell them it’s an “easy fix.” But if they can’t get past the chartreuse kitchen or the green-striped wallpaper in the dining room, buyers may not be able to see their family using those spaces.)

To break up all the beige, gray, or white, touches that evoke a feeling of comfort can be used sparingly. For example, you can give your bathroom that spa vibe simply by adding a basket filled with crisp white towels. A bowl of lemons, potted orchids, or a vase filled with fresh flowers can add a pop of cheer and color in the foyer or kitchen.

7. Let There Be Light

Put your home in the best light by letting in as much sunshine as possible during the day and turning on all the lights for night showings. (No need to make buyers fumble for switches.) Open the curtains and blinds (unless the view is a drawback). Keep pathways and porches well lit when the sun goes down. Replace burned-out bulbs. And think about bouncing a little light around rooms with well-placed mirrors, which can make a room appear larger.

8. Curb Appeal Matters

Why do all that work to fix up your home’s interior if there is a chance buyers won’t even get out of the car? First impressions are lasting, so put out the welcome mat (literally, make sure a clean doormat is outside the door) and use other ideas for amping up your home’s curb appeal.

Consider power-washing the walkway, and updating (or at least clean) outdoor light fixtures. In the winter, clear the snow. If you need a pop of color, you can do it with plants. And if the front door is dated or just dingy, think about fixing it up. If buyers have to wait a minute for you or an agent to let them in, they’re likely to notice if the door looks great … or doesn’t.

9. Look Beyond the Porch

Depending on the weather, buyers may spend time outside checking the exterior of the house — front and back. If weather permits, you may want to sweep the leaves off the roof, try to get rid of any mold or mildew on the house or fences, clean the patio or pool deck, and wash the windows inside and out. The goal here is to make your home more appealing but also to help buyers focus on the fabulous features of your home instead of potential maintenance.

10. Create Space

To get a more open look, consider removing any oversized or extra pieces of furniture. A small bedroom may look bigger, for example, with just a dresser instead of a dresser and chest, or if you remove a bed’s oversized headboard or footboard. In the living room, smaller pieces may be preferable to an overstuffed sectional that seats 10. Remember, the living room is a key room for buyers, so it may be worth renting furniture that shows off its size and other details, such as built-in bookshelves or a fireplace.

11. Clear the Air

If you have pets, or if there’s a smoker in your home, it may require some extra steps to keep buyers from sniffing them out. You may want to have the rugs cleaned, and if you haven’t done it in a while, it may help to have the ductwork cleaned as well. Mildew may be another odor issue. If odors linger, open the windows if possible, but be sparing with sprays and plug-in air fresheners — some buyers may be sensitive to certain smells. If a quick cover-up is necessary, consider baking some cookies.

12. Define Rooms

Give each room a purpose, even if you don’t use the space that way yourself. Could a spare bedroom be turned into a craft room or office? Would your attic be a great space for a teen hangout room? Could your basement be transformed into a home theater by moving a TV downstairs and adding a popcorn machine? Get buyers excited about the possibilities.

The Takeaway

Any competitive edge a home seller can find is worth considering. Home staging could boost the timeline and bottom line of the deal. And at the very least you’ll want to tidy up and spruce up your home so you can get the deal done and move on to your next home as swiftly as possible.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

FAQ

What is the 3 and 5 rule in home staging?

The 3 or 5 rule states that a well-staged room should look good both from a slight distance (5 feet away) and up close (the one-foot rule). This means keeping areas free of clutter and also sparkling clean, and including some decor items that are larger and look good from a distance and others that are smaller details seen only up close.

What is the 1/5 rule in home staging?

The ⅕ rule in home staging is a decluttering strategy that states that rooms, cabinets, and storage areas should be only one-fifth full when a home is being staged for sale.

Photo credit: iStock/FollowTheFlow

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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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How does a home equity loan work? First, it’s important to understand that the term home equity loan is simply a catchall for the different ways the equity in your home can be used to access cash. The most common types of home equity loans are fixed-rate home equity loans, home equity lines of credit (HELOCs), and cash-out refinancing.

What Are the Main Types of Home Equity Loans?

When folks think of home equity loans, they typically think of either a fixed-rate home equity loan or a home equity line of credit (HELOC). There is a third way to use home equity to access cash, and that’s through a cash-out refinance.

With fixed-rate home equity loans or HELOCs, the primary benefit is that the borrower may qualify for a better interest rate using their home as collateral than by using an unsecured loan — one that is not backed by collateral. Some people with high-interest credit card debt may choose to use a lower-rate home equity loan to pay off those credit card balances, for instance.

This does not come without risks, of course. Borrowing against a home could leave it vulnerable to foreclosure if the borrower is unable to pay back the loan. A personal loan may be a better fit if the borrower doesn’t want to put their home up as collateral.

How much a homeowner can borrow is typically based on the combined loan-to-value ratio (CLTV ratio) of the first mortgage plus the home equity loan. For many lenders, this figure cannot exceed 85% CLTV. To calculate the CLTV, divide the combined value of the two loans by the appraised value of the home. In addition, utilizing a home equity loan calculator can help you understand how much you might be able to borrow using a home equity loan. It’s similar to the home affordability calculator you may have used during the homebuying process.

Of course, qualifying for a home equity loan or HELOC is typically contingent on several factors, such as the credit score and financial standing of the borrower.

Fixed-Rate Home Equity Loan

Fixed-rate loans are pretty straightforward: The lender provides one lump-sum payment to the borrower, which is to be repaid over a period of time with a set interest rate. Both the monthly payment and interest rate remain the same over the life of the loan. Fixed-rate home equity loans typically have terms that run from five to 30 years, and they must be paid back in full if the home is sold.

With a fixed-rate home equity loan, the amount of closing costs is usually similar to the costs of closing on a home mortgage. When shopping around for rates, ask about the lender’s closing costs and all other third-party costs (such as the cost of the appraisal if that will be passed on to you). These costs vary from bank to bank.

This loan type may be best for borrowers with a one-time or straightforward cash need. For example, let’s say a borrower wants to build a $20,000 garage addition and pay off a $4,000 medical bill. A $24,000 lump-sum loan would be made to the borrower, who would then simply pay back the loan with interest. This option could also make sense for borrowers who already have a mortgage with a low interest rate and may not want to refinance that loan.

Recommended: What Is a Fixed-Rate Mortgage?

Home Equity Line of Credit (HELOC)

A HELOC is revolving debt, which means that as the balance borrowed is paid down, it can be borrowed again during the draw period (whereas a home equity loan provides one lump sum and that’s it). As an example, let’s say a borrower is approved for a $10,000 HELOC. They first borrow $7,000 against the line of credit, leaving a balance of $3,000 that they can draw against. The borrower then pays $5,000 toward the principal, which gives them $8,000 in available credit.

Unlike with a fixed-rate loan, a HELOC’s interest rate is variable and will fluctuate with market rates, which means that rates could increase throughout the duration of the credit line. The monthly payments will vary because they’re dependent on the amount borrowed and the current interest rate.

HELOCs have two periods of time that are important for borrowers to be aware of: the draw period and the repayment period.

•   The draw period is the amount of time the borrower is allowed to use, or draw, funds against the line of credit, commonly 10 years. After this amount of time, the borrower can no longer draw against the funds available.

•   The repayment period is the amount of time the borrower has to repay the balance in full. The repayment period lasts for a certain number of years after the draw period ends.

So, for instance, a 30-year HELOC might have a draw period of 10 years and a repayment period of 20 years. Some buyers only pay interest during the draw period, with principal payments added during the repayment period. A HELOC interest-only calculator can help you understand what interest-only payments vs. balance repayments might look like.

A HELOC may be best for people who want the flexibility to pay as they go. For an ongoing project that will need the money portioned out over longer periods of time, a HELOC might be the best option. While home improvement projects might be the most common reason for considering a HELOC, other uses might be for wedding costs or business start-up costs.

Home Equity Loan Fees

Generally, under federal law, fees should be disclosed by the lender. However, there are some fees that are not required to be disclosed. Borrowers certainly have the right to ask what those undisclosed fees are, though.

Fees that require disclosure include application fees, points, annual account fees, and transaction fees, to name a few. Lenders are not required to disclose fees for things like photocopying related to the loan, returned check or stop payment fees, and others. The Consumer Finance Protection Bureau provides a loan estimate explainer that will help you compare different estimates and their fees.

Home Equity Loan Tax Deductibility

Since enactment of the Tax Cuts and Jobs Act of 2017, interest on home equity loans and HELOCs is only deductible if the funds are used to substantially improve a home. Checking with a tax professional to understand how a home equity loan or HELOC might affect a certain financial situation is recommended.

Cash-Out Refinance

Mortgage refinancing is the process of paying off an existing mortgage loan with a new loan from either the current lender or a new lender. Common reasons for refinancing a mortgage include securing a lower interest rate, or either increasing or decreasing the term of the mortgage. Depending on the new loan’s interest rate and term, the borrower may be able to save money in the long term. Increasing the term of the loan may not save money on interest, even if the borrower receives a lower interest rate, but it could lower the monthly payments.

With a cash-out refinance, a borrower may be able to refinance their current mortgage for more than they currently owe and then take the difference in cash. For example, let’s say a borrower owns a home with an appraised value of $400,000 and owes $200,000 on their mortgage. They would like to make $30,000 worth of repairs to their home, so they refinance with a $230,000 mortgage, taking the difference in cash.

As with home equity loans, there typically are some costs associated with a cash-out refinance. Generally, a refinance will have higher closing costs than a home equity loan.

This loan type may be best for people who would prefer to have one consolidated loan and who need a large lump sum. But before pursuing a cash-out refi you’ll want to look at whether interest rates will work in your favor. If refinancing will result in a significantly higher interest rate than the one you have on your current loan, consider a home equity loan or HELOC instead.

The Takeaway

There are three main types of home equity loans: a fixed-rate home equity loan, a home equity line of credit (HELOC), and a cash-out refinance. Just as with a first mortgage, the process will involve a bank or other creditor lending money to the borrower, using real property as collateral, and require a review of the borrower’s financial situation. Keep in mind that cash-out refinancing is effectively getting a new mortgage, whereas a fixed-rate home equity loan and a HELOC involve another loan, which is why they’re referred to as “second mortgages.”

While each can allow you to tap your home’s equity, what’s unique about a HELOC is that it offers the flexibility to draw only what you need and to pay as you go. This can make it well-suited to those who need money over a longer period of time, such as for an ongoing home improvement project.

SoFi now offers flexible HELOCs. Our HELOC options allow you to access up to 90% of your home’s value, or $500,000, at competitively low rates. And the application process is quick and convenient.

FAQ

What is the downside of a home equity loan?

The primary downside of a home equity loan is that the collateral for the loan is your home, so if you found yourself in financial trouble and couldn’t make your home equity loan payment, you risk foreclosure. A second consideration is that a home equity loan provides you with a lump sum. If you are unsure about how much you need to borrow, consider a home equity line of credit (HELOC) as well.

How much does a $50,000 home equity loan cost?

The exact cost of a $50,000 home equity loan depends on the interest rate and loan term. But if you borrowed $50,000 with a 7.50% rate and a 10-year term, your monthly payment would be $594 and you would pay a total of $21,221 in interest over the life of the loan.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

^²SoFi Bank, N.A. NMLS #696891 (Member FDIC), offers loans directly or we may assist you in obtaining a loan from SpringEQ, a state licensed lender, NMLS #1464945.
All loan terms, fees, and rates may vary based upon your individual financial and personal circumstances and state.
You should consider and discuss with your loan officer whether a Cash Out Refinance, Home Equity Loan or a Home Equity Line of Credit is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit not originated by SoFi Bank. Terms and conditions will apply. Before you apply, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and a minimum loan amount. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria. Information current as of 06/27/24.
In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee.

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