Refinance & Equity
Adjust your rate or term without touching your equity.
A rate-and-term refinance replaces your mortgage to change the interest rate, the term, or both, without adding to your loan balance the way a cash-out refinance does.
Quick answer
What does a rate-and-term refinance actually change?
A rate-and-term refinance replaces your existing mortgage with a new loan that adjusts the interest rate, the repayment term, or both, generally without increasing your loan balance to pull out cash. Common goals include lowering the rate, shortening or extending the term, switching from adjustable to fixed, or removing mortgage insurance once equity supports it.
Written and reviewed by Abdel Khawatmi, Area Manager at Got Mortgages (NMLS #1712023) ·
Reasons homeowners pursue this refinance
It's not always about a lower payment - sometimes it's about structure.
Rate improvement
If your current rate no longer reflects your credit profile or the market, a refinance can reset it.
Term changes
Shortening a term can build equity faster; extending one can lower monthly payments.
Structural fixes
Removing mortgage insurance, dropping a co-borrower or switching loan type are common structural goals.
What a rate-and-term refinance does and doesn't do
This type of refinance is focused on adjusting the terms of your loan - interest rate, repayment period, or both - without materially increasing your loan balance for cash out. If your goal is to access equity as funds in hand, that falls under cash-out refinancing instead.
Because you're not requesting additional loan proceeds, some lenders may treat these refinances with somewhat different loan-to-value considerations than a cash-out request, though specifics vary by program.
Common goals behind this type of refinance
People refinance for reasons beyond simply lowering a monthly payment. Understanding your goal helps determine the right term and structure for the new loan.
- Lowering the interest rate to reduce overall interest paid
- Shortening the term, for example from a 30-year to a 15-year loan, to build equity faster
- Extending the term to reduce monthly payment obligations
- Switching from an adjustable-rate to a fixed-rate mortgage
- Removing mortgage insurance once sufficient equity exists
- Removing a co-borrower through a structured refinance
What to gather before you start
Your current mortgage statement, an estimate of your home's value, and a clear sense of how much longer you plan to stay in the home all help us model whether a refinance makes sense for your situation.
When it may not be worth it
If closing costs would outweigh the benefit given how long you plan to keep the loan, or if your current terms are already favorable, a rate-and-term refinance may not make sense right now. We'll tell you that directly if the numbers don't support it.
Situations where this refinance often fits
- Lowering an existing rate as circumstances improve
- Shortening the loan term to build equity faster
- Switching from adjustable to fixed
- Removing mortgage insurance
- Removing a co-borrower after a life change
- Consolidating a second loan into a single first mortgage
Keep exploring
- GotRefis.comOur refinance resource center: cash-out, rate-and-term and equity strategy education.
- Cash-Out RefinanceAccess equity as cash by replacing your entire mortgage.
- HELOCAccess equity through a revolving line instead of refinancing your first mortgage.
- Refinance & Equity OverviewSee the full range of refinance and equity options we structure.
- Divorce & Mortgage PlanningHow refinancing can be used to remove a co-borrower after a divorce.
- Build My Mortgage PlanStart reviewing whether a refinance makes sense for you.
- Contact UsSend your current loan details and goals for a closer look.
Questions people actually ask
- A rate-and-term refinance replaces your existing mortgage with a new loan that adjusts the interest rate, the loan term, or both, without pulling equity out as cash.
Wondering if refinancing is worth it right now?
Send us your current mortgage details and goals, and we'll model whether a rate-and-term refinance makes sense.
Refinance eligibility, seasoning requirements, loan-to-value limits and pricing vary by loan program and investor guidelines. This page is educational and not a commitment to lend.
Educational information only. Not a commitment to lend, an offer of credit, or a guarantee of terms, approval, savings, or timing. All scenarios are illustrative and anonymized. Equal Housing Opportunity.