Rate-and-Term Refinance
What Is a Rate-and-Term Refinance?
A rate-and-term refinance allows you to replace your current mortgage with a new loan featuring better terms—typically a lower interest rate, a shorter payoff period, or both.
Unlike cash-out refinances, this option focuses solely on improving your mortgage structure, helping homeowners lower monthly payments, reduce total interest paid, or move into a more stable loan program.
Whether your goal is to save more each month or pay off your home faster, a rate-and-term refinance is one of the simplest and most cost-effective refinance options available.
Benefits of a Rate-and-Term Refinance
✔ Lower Your Interest Rate
Lock in a lower rate to reduce the amount you pay over the life of your loan.
✔ Lower Your Monthly Payment
Lower rates and better loan terms often result in more affordable monthly payments.
✔ Shorten Your Loan Term
Move from a 30-year to a 20- or 15-year term to pay off your home sooner and save thousands in long-term interest.
✔ Switch From Adjustable to Fixed Rates
Secure stability by converting from an ARM to a fixed-rate mortgage.
✔ Remove PMI (Private Mortgage Insurance)
If you have enough equity, refinancing into a new loan can eliminate monthly mortgage insurance costs.
✔ No Cash Needed at Closing
Most borrowers can roll closing costs into the loan for a zero-cash-to-close option.
Rate-and-Term Refinance Eligibility Requirements
Requirements vary by loan type, but most homeowners will need:
1. A Stable Payment History
Recent on-time mortgage payments are essential.
2. Acceptable Credit & Income
Better credit typically means better refinancing terms.
3. Sufficient Home Equity
Most programs require equity to qualify, especially if you’re removing mortgage insurance.
4. Verification Documents
Standard items such as pay stubs, tax returns, and bank statements (unless using specialty loans).
5. Home Appraisal (Most Cases)
An updated appraisal verifies your property value.
How the Rate-and-Term Refinance Process Works
Step 1: Review Your Current Loan
We analyze your rate, payment, equity, and potential savings.
Step 2: Choose Your New Loan Terms
Select your rate, loan term, and structure.
Step 3: Provide Documentation
Submit income and asset documents to confirm eligibility.
Step 4: Appraisal & Underwriting
Your home is evaluated (if required), and the file goes through underwriting.
Step 5: Close on Your New Loan
Finalize the new mortgage and start enjoying improved loan terms.
Who Should Consider a Rate-and-Term Refinance?
Choose this refinance if you want to:
- Lower your monthly payment
- Reduce the amount of interest you pay long-term
- Pay off your home faster
- Switch out of an FHA loan to remove mortgage insurance
- Replace an adjustable-rate mortgage
- Improve your rate after a credit score increase
Rate-and-Term Refinance FAQs
How much can I save by refinancing?
Savings depend on your new rate and term. Many homeowners save hundreds per month.
Will my loan term reset back to 30 years?
Only if you choose to. You can refinance into almost any term: 10, 15, 20, or 30 years.
Does this refinance give me cash back?
No—this option strictly adjusts your rate and/or loan term.
How long does the process take?
Most refinances close in 15–25 days.
Can I remove mortgage insurance?
Yes—if you have enough equity and qualify for a conventional loan.
A rate-and-term refinance can help you lower your payment, reduce interest, and strengthen your financial future.
Get your free refinance review today and see how much you can save.
