What Is A Rate & Term Refinance

A rate-and-term refinance can change the interest rate, the term, or both rate and term of an existing mortgage without providing any cash-back at closing. Rate-and-term refinances often carry lower interest rates than cash-out refinances.


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Why do a Rate and Term Refinance?

Clients will typically do a Rate and term refinance for 3 main reasons:

Decrease Term

Shorten the amount of time they have to pay off their mortgage and save the most money on interest (typically will increase the monthly payment)

Extend Term

Extending the term will spread the amount owed over a longer period of time ultimately lowering the monthly payment

Lower interest rate

Save money on interest over the life of the loan

Rate & Term Examples

Below are example client scenarios in which define the options available

Decrease Term

A client wants to pay off the home faster, they originally took out a 30 year mortgage but elect to pay the home off faster and do a rate and term refinance into a 15 year loan, ultimately saving thousands in interest and years worth of payments.

Extend Term

A client has already paid down their mortgage by 12 years (18 years remaining) but they want to save money on a monthly basis so they elect to do a rate and term refinance to go back to a 30 year

Lower Interest Rate

A client will do a rate and term refinance to reduce their interest rate from a 4.5% down to a 3.5%

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