Rate and Term
Refinance Loan

The Low Down on Rate and Term Refinance Loans

A rate and term refinance allows you to adjust your mortgage’s interest rate or term length. This option can help you lower your interest rate or monthly payments or shorten the length of your loan. Rate and term refinancing is available for both conventional and FHA loans.

Key Benefits

Lower Interest Rate: Refinance to take advantage of lower current market rates.
Reduce Monthly Payments: Extend the term of your loan to lower your monthly payments.
Change Your Loan Term: Adjust your repayment schedule by either extending or shortening the length of your mortgage.
Pay Off Your Mortgage Faster: Reduce your loan term to pay off your mortgage in a shorter time frame, such as switching to a 15-year term.

Who It’s For

Homeowners looking to lower their interest rate.
Borrowers seeking to reduce their monthly payments or adjust their loan term.
Homeowners interested in paying off their mortgage faster.

Pros and Cons

Pros:

Lower Interest Rate: You can potentially secure a lower interest rate, reducing monthly payments and potentially saving money over the life of the loan.
Reduce Monthly Payments: Extending the loan term can lower your monthly mortgage payments, making them more affordable.
Pay Off the Mortgage Sooner: Shortening the term (e.g., switching to a 15-year mortgage) allows you to pay off your mortgage faster and save on interest.

Cons:

Closing Costs: You will incur closing costs when refinancing, which can offset savings in the short term.
Extended Loan Term: Extending the loan term might mean paying more interest over time, even with lower monthly payments.
Qualification Requirements: You must meet credit and income requirements, and the savings may not justify the costs for all borrowers.