What is a rate-and-term refinance?
Answered by Onias Derilus, Mortgage Capital · NMLS# 1859012 · Florida licensed mortgage broker
A rate-and-term refinance replaces your existing mortgage with a new one that has a better rate, a different term, or both — without taking cash out. It's the classic way to lower your payment or pay off faster.
Because no cash leaves the deal, it has easier guidelines and more flexible LTV than a cash-out. We'll calculate the break-even point so you know how long it takes for the savings to cover the closing costs.
Changing rate or term
A rate-and-term refinance replaces your loan with a new one that has a better rate, a different term, or both. You do not take cash out; the goal is a lower payment or faster payoff.
For example, you might move from a 7% rate to a 6% rate, or from a 30-year to a 15-year loan.
When to use it
It makes sense when rates have dropped, when you want to remove mortgage insurance, or when you want to pay off your home sooner. Closing costs apply, so timing matters.
We calculate your savings before you commit. Reach out and we will see if a rate-and-term refinance helps you.