Lower your payment, shorten your timeline, or lock in stability.
A rate and term refinance replaces your existing mortgage with a new one, keeping your loan balance roughly the same while improving your interest rate, your loan term, or both. It's the most straightforward refinance option, and for most homeowners it's the right starting point when evaluating whether refinancing makes sense.
What's the difference between a rate/term refinance and other refinance options?
A rate/term refinance does one thing: it optimizes your existing mortgage. Your loan balance stays close to what it is today, you're not pulling cash out or consolidating other debts. If your goal is to access your equity as cash, a cash-out refinance or HELOC may be a better fit. If your goal is to lower your rate, shorten your term, or switch from an adjustable rate to a fixed rate, this is the right tool.
Who It's For:
Homeowners who want to take advantage of lower market rates, switch from an adjustable rate to a fixed rate for long-term stability, or shorten their loan term to build equity faster and reduce total interest paid.
Key Benefits:
- Lower your interest rate and reduce what you pay every month
- Shorten your term - move from a 30-year to a 15-year mortgage and pay off your home years sooner
- Switch from an adjustable rate to a fixed rate and eliminate future payment uncertainty
- No cash taken out - your loan balance stays close to what it is today
- Break-even analysis available - we'll show you exactly when the refinance pays for itself
Factors to Consider:
Whether a rate/term refinance makes sense depends on a few key factors. The most important is your break-even point — the number of months it takes for your monthly savings to recover the closing costs of the new loan. If you plan to stay in the home past that point, refinancing saves you money. If you expect to sell or move before then, the math may not work in your favor.
Other factors worth considering: how much of your original loan term remains, the difference between your current rate and what's available today, and whether your credit profile has improved since you originally purchased. A stronger credit score since closing can mean meaningfully better terms now.
What are the eligibility requirements?
Eligibility for a rate/term refinance is similar to what was required when you first purchased. Lenders will look at your current equity position, credit score, income, employment history, and debt-to-income ratio. Requirements vary by loan type and lender, the best way to know where you stand is to have us run your specific numbers.
Contact 220 Mortgage Templates 3.0 today to see if you are eligible to refinance your home and save money over the life your remaining loan!
