Rate and Term Refinance Guide
A rate and term refinance replaces your existing mortgage with a new loan that has a different interest rate, loan term, or both—without taking cash out. This strategy is commonly used to lower monthly payments, reduce total interest, or move from an adjustable-rate loan to a fixed-rate mortgage.
Check Refinance Options or Talk to a Loan Expert
What Is a Rate and Term Refinance?
In a rate and term refinance, the loan balance generally stays the same while the interest rate, loan term, or both are adjusted. Unlike a cash-out refinance, you are not pulling equity from the home. The goal is improved loan efficiency rather than accessing funds.
- Lowering your interest rate
- Shortening or extending the loan term
- Switching from an adjustable-rate to a fixed-rate mortgage
- Removing mortgage insurance when eligible
When a Rate and Term Refinance Makes Sense
- Interest rates are meaningfully lower than your current rate
- Your credit profile has improved since origination
- You want to shorten your loan term to reduce total interest
- You want more payment stability with a fixed rate
When a Rate and Term Refinance May Not Be a Fit
- Closing costs outweigh long-term savings
- You plan to sell the home in the near future
- Your current rate is already competitive
Costs Associated With a Rate and Term Refinance
While no cash is taken out, refinancing still involves standard closing costs. Understanding break-even timing is critical.
- Lender fees and third-party costs
- Appraisal and title fees
- Prepaid items such as taxes and insurance
Rate and Term Refinance: FHA vs. Conventional
Rate and term refinances are available for both FHA and conventional loans, but guidelines differ. FHA refinances may involve mortgage insurance considerations, while conventional refinances can allow PMI removal if sufficient equity exists.
Related Refinance & Mortgage Guides
- Mortgage Refinance Guides
- Cash-Out Refinance Guide
- Closing Costs Explained
- Mortgage Rates Explained
- FHA vs. Conventional Loans
See If a Rate and Term Refinance Makes Sense for You
If you’re refinancing in Missouri, Kansas, or Louisiana, 360 Mortgage can help you evaluate rate and term refinance options, calculate break-even points, and decide whether refinancing aligns with your long-term goals.
This page is for educational purposes only and is not a commitment to lend. Loan programs, rates, terms, and availability vary by borrower qualifications, property type, and lender requirements.
Key points before you decide
- Start with the goal: purchase, lower payment, shorter term, cash out, streamline refinance, or investor financing.
- Review the borrower profile: credit, income, debts, assets, property use and any timeline constraints.
- Compare the loan option against total monthly payment, cash to close, mortgage insurance, closing costs and long-term plans.
Frequently asked questions
Who is Rate and Term Refinance Guide best for?
Rate and Term Refinance Guide may fit borrowers whose goals, documentation and property details line up with the program requirements. A mortgage review is the fastest way to compare options without relying on generic assumptions.
What documents should I prepare?
Most borrowers should be ready to discuss income, assets, debts, credit history, property details and the purpose of the loan. Exact documentation depends on the program and underwriting review.
What is the next step?
The next step is to talk with 360 Mortgage so the team can review your situation, explain available options and outline the application path.