Rate & Term Refinance

Restructure your mortgage to potentially lower payments or adjust loan terms

Minimum Credit Score

620

Down Payment

N/A

Typical Timeline

21 to 30 Days

Overview

A rate and term refinance replaces your existing mortgage with a new loan that has a different interest rate, loan term, or both — without changing the amount you owe. It's the most straightforward type of refinance and is typically used to lower your monthly payment, shorten your payoff timeline, or remove private mortgage insurance.

Unlike a cash-out refinance, you're not pulling equity from your home. The goal is purely to improve the structure of your loan — whether that means locking in a lower rate, switching from an adjustable-rate to a fixed-rate mortgage, or shortening a 30-year term to 15 years to build equity faster.

Key Benefits

Potentially lower your interest rate and monthly payment
Shorten your loan term to pay off your home faster
Switch from an adjustable-rate to a fixed-rate mortgage
Remove private mortgage insurance (PMI) if equity allows
Reduce total interest paid over the life of the loan
Improve long-term financial stability

Who Qualifies?

Existing homeowners with a current mortgage
Borrowers who have improved their credit since their original loan
Homeowners whose property has appreciated enough to remove PMI
Those who want to switch from an adjustable to a fixed rate

Requirements

Credit score typically 620 or higher
Sufficient home equity (typically 5–20% depending on program)
Debt-to-income ratio generally below 43–50%
Stable income and employment history
Property appraisal may be required
Closing costs apply (can often be rolled into the loan)
Net tangible benefit must be demonstrated

Pros & Cons

Advantages

Can meaningfully reduce your monthly payment and total interest cost
Switching to a shorter term builds equity dramatically faster
No cash is taken out — you keep your equity intact

Drawbacks

Closing costs must be recouped through monthly savings (break-even analysis required)
Resetting to a new 30-year term extends your total payoff timeline
If rates have risen since your original loan, refinancing may not make sense

What to Expect

Break-Even Analysis: We calculate exactly how many months it takes for your monthly savings to cover closing costs.

Appraisal: Most rate-and-term refinances require a current appraisal to confirm your home's value.

Closing: You can often close with a mobile notary at your home or office.

Compare Loan Options

vs. Cash-Out Refinance

A cash-out refinance increases your loan balance to give you cash. A rate-and-term refinance keeps your balance the same and only improves your rate or term.

vs. Loan Modification

A loan modification changes the terms of your existing loan with your current lender. A refinance replaces the loan entirely, often with better terms and a lender of your choice.

Frequently Asked Questions

How do I know if a rate-and-term refinance makes sense?

The key metric is your break-even point — how many months until your monthly savings cover the closing costs. If you plan to stay in the home past that point, it typically makes sense.

Can I roll closing costs into the loan?

Yes. Most borrowers do a "no out-of-pocket" refinance by rolling lender fees, title, and appraisal costs into the new loan balance.

Will I need a new appraisal?

In most cases, yes. However, some automated underwriting systems may issue an appraisal waiver depending on your loan profile and equity position.

Can I refinance if I have PMI?

Yes — and if your home has appreciated enough to bring your loan-to-value below 80%, a refinance is a great way to eliminate PMI entirely.

Ideal For

Homeowners with rates higher than current market rates
Those wanting to shorten their loan term
Borrowers switching from ARM to fixed-rate
Homeowners looking to remove PMI
Anyone seeking to reduce total interest paid

Related Calculators

Use these calculators to estimate your payments and explore your options:

Refinance Calculator

Next Steps

Ready to move forward with a Rate & Term Refinance? Here's how to get started:

Schedule a consultation to discuss your specific situation and goals
Get pre-approved to understand your buying power and strengthen your offer
Find your home with confidence knowing your financing is secured
Close on your loan with expert guidance every step of the way

Ready to Explore This Loan Option?

Schedule a Call