Rate and Term Refinance
A rate and term refinance replaces your existing mortgage with a new one, focused on changing the interest rate, loan term, or loan type — without significantly increasing the loan balance.
Min. Down Payment
N/A — refinancing existing mortgage
Credit Guidance
620+ typically for conventional; varies by loan type
Income / DTI
Standard income verification required
Occupancy
Primary residence, second home, or investment property
A rate and term refinance replaces your existing mortgage with a new loan. Unlike a cash-out refinance, the primary goal is not to access equity — it is to improve the terms of your existing mortgage. Common reasons to consider a rate and term refinance include: reducing the interest rate, shortening the loan term, converting from an adjustable rate to a fixed rate, or eliminating FHA mortgage insurance by refinancing into a conventional loan (if equity supports it). Refinancing is not free. Closing costs apply, and the decision should always include a break-even analysis — how many months will it take for your monthly savings to exceed the upfront cost? If you plan to move or sell before reaching that break-even point, the refinance may not benefit you financially. Extending the loan term can lower a monthly payment but may increase the total interest paid over the life of the loan. Your loan officer can model multiple scenarios so you can make an informed decision based on your actual timeline and goals.
Key Benefits
- Potential to lower monthly payment by adjusting the rate or extending the term
- Can shorten the loan term to build equity faster and pay less interest over time
- Can switch from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage
- Can transition from an FHA loan to a conventional loan to eliminate mortgage insurance (if equity supports it)
Considerations
- Closing costs apply and must be factored into the decision
- Extending the loan term resets your amortization, which may increase total interest paid over time
- Requires sufficient equity, qualifying credit, and income documentation
- A break-even calculation should be done to confirm the refinance makes financial sense given your timeline
Frequently Asked Questions
Have questions about Rate and Term Refinance?
Mia can explain this public overview and help you prepare questions for a loan officer. Current terms and eligibility need individual confirmation.
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Work Hard Mortgage · NMLS #2396714 · Equal Housing Opportunity · Licensed in Utah. Program availability and guidelines may change. Final eligibility depends on credit, income, assets, property type, occupancy, and underwriting approval.