How does it differ from cash-out?

Rate and term: no cash to you. Cash-out: you borrow more than you owe and receive the difference. Cash-out often has stricter rules and may have different rates.

When is rate and term used?

To lower your rate, shorten your term (e.g., 30 to 15 years), or switch from ARM to fixed. Common when rates have dropped.

Are there benefits over cash-out?

Rate and term refinances may have simpler underwriting, lower rates, or better terms in some programs (e.g., VA IRRRL, FHA streamline).

What Is a Rate and Term Refinance?

Disclaimer: This website provides general mortgage and financial information for educational purposes only. It does not constitute financial, legal, or mortgage advice. Housentia is not a licensed mortgage broker, lender, or loan originator.

This content is provided for general educational purposes only and does not constitute financial, legal, or mortgage advice.

Introduction

A rate and term refinance changes your interest rate, loan term, or both without taking cash out. The new loan pays off your current balance. See Cash Out vs Rate and Term Refinance, What Is a Cash Out Refinance, and What Is Refinance.

Frequently Asked Questions

What is a rate and term refinance?: A rate and term refinance changes your interest rate, loan term, or both without taking cash out. The new loan amount equals (or is close to) the payoff of your current loan.
How does it differ from cash-out?: Rate and term: no cash to you. Cash-out: you borrow more than you owe and receive the difference. Cash-out often has stricter rules and may have different rates.
When is rate and term used?: To lower your rate, shorten your term (e.g., 30 to 15 years), or switch from ARM to fixed. Common when rates have dropped.
Are there benefits over cash-out?: Rate and term refinances may have simpler underwriting, lower rates, or better terms in some programs (e.g., VA IRRRL, FHA streamline).

Educational Disclaimer

This content is provided for general educational purposes only and does not constitute financial, legal, or mortgage advice.

Housentia is not a lender, mortgage broker, or loan originator.

Terms vary by lender.