Rate-and-Term Refinance
Replace your loan to improve your rate or term.
Overview
A rate-and-term refinance replaces your existing mortgage with a new loan to improve your interest rate, change your loan term, or switch loan types — for example, moving from an adjustable rate to a fixed rate — without taking meaningful cash out at closing. It's the more straightforward refinance option when your goal is a better rate or a different payoff timeline rather than accessing equity.
Who It’s For & What You’ll Need
- Your current mortgage in reasonably good standing
- A qualifying credit score and debt-to-income ratio
- An appraisal in most cases, to confirm your home’s current value and equity position
- Closing costs, which can sometimes be rolled into the new loan balance
- Proof of income and employment, similar to a purchase loan
Benefits
- The potential to lower your monthly payment or reduce total interest paid over the life of the loan
- The option to shorten your term and build equity faster, or extend it to lower monthly payments
- Switch from an adjustable-rate to a fixed-rate mortgage for long-term payment stability
- In some cases, remove a co-borrower from the loan, subject to qualifying on your own
Common Scenarios
- A homeowner refinancing purely to lower their rate after market rates drop meaningfully below their current rate.
- A borrower switching from an adjustable-rate mortgage to a fixed rate ahead of a scheduled rate adjustment.
- A homeowner shortening their remaining term from 30 to 15 years to pay off the home faster.
Frequently Asked Questions
What’s the difference between a rate-and-term refinance and a cash-out refinance?
A rate-and-term refinance is focused on improving your rate or term without taking significant cash out, while a cash-out refinance intentionally borrows more than your current balance and pays you the difference.
Is there a minimum time I have to wait before refinancing?
It depends on your current loan type and the new program you’re refinancing into; some loans have a required seasoning period before a refinance is allowed. We can confirm the timeline that applies to your situation.
Will refinancing restart my 30-year term from scratch?
Only if you choose a new 30-year term. You can also choose a shorter term, like 15 or 20 years, or in some cases a term that matches your remaining payoff timeline.
What closing costs should I expect on a rate-and-term refinance?
Costs are similar to a purchase loan — appraisal, title, and lender fees, generally a percentage of the loan amount. Some lenders offer a "no-closing-cost" structure that rolls these costs into a slightly higher rate instead.
Related Calculators
Run your own numbers before you apply:
Ready to Move Forward with Rate-and-Term Refinance?
Start your application, or talk it through with a loan officer first — whichever fits where you are.