A rate and term refinance replaces your existing mortgage with a new one that has a better interest rate, a different loan term, or both — without taking any cash out of your home’s equity. It’s the most straightforward type of refinance and often the smartest financial move when rates drop or your credit improves.
What Does a Rate & Term Refinance Do?
A rate and term refinance can accomplish several things depending on your goals:
- Lower your interest rate and reduce your monthly payment
- Shorten your loan term — for example, moving from a 30-year to a 15-year mortgage — to pay off your home faster and save significantly on total interest
- Switch from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage for predictable, stable payments
- Remove PMI if your home’s value has increased enough to bring your loan-to-value ratio below 80%
When Does a Rate & Term Refinance Make Sense?
This type of refinance tends to make the most sense when:
- Interest rates have dropped since you got your original loan
- Your credit score has improved significantly, qualifying you for a better rate
- You want to switch from an ARM to a fixed rate for long-term stability
- You want to pay your home off faster without dramatically increasing your monthly payment
- You’re paying PMI and have built enough equity to eliminate it
The Break-Even Calculation
With a rate and term refinance, it’s important to calculate your break-even point — the number of months it takes for your monthly savings to recover the cost of refinancing.
For example:
- Closing costs: $4,000
- Monthly savings: $200
- Break-even point: 20 months
If you plan to stay in the home longer than 20 months, the refinance makes financial sense. If you might sell or move sooner, it may not. We’ll always run this calculation for you upfront so you can make a confident decision.
Note: If you’d prefer to avoid upfront closing costs entirely, ask us about our no closing cost refinance option — where the lender covers the costs in exchange for a slightly higher rate.
Rate & Term Refinance in Michigan, Arizona, Florida & Texas
We help homeowners refinance across all four states we serve. Closing costs, title customs, and transfer tax rules vary by state — but the mechanics of a rate and term refinance work the same everywhere. We’ll walk you through exactly what your refinance will cost in your specific market before you ever commit.
Frequently Asked Questions
How much can I save with a rate & term refinance?
It depends on your current rate, loan balance, and what rate you qualify for today. Even a 0.5% reduction in rate can mean hundreds of dollars per month on a larger loan. The best way to know is to let us run the numbers for your specific situation.
Does a rate & term refinance reset my loan term?
Only if you choose a new 30-year term. You can refinance into a 15, 20, or 25-year term to avoid resetting the clock — and in many cases, a shorter term comes with an even lower rate.
Will I need a new appraisal?
In most cases, yes — though some loan types and lenders offer appraisal waivers depending on your loan-to-value ratio and credit profile. We’ll let you know upfront whether an appraisal will be required for your scenario.
How long does a rate & term refinance take?
Most refinances close in 20-30 days. We work to move as efficiently as possible and will keep you informed at every step.
Ready to See Your New Rate?
There’s no cost and no obligation to find out what you qualify for. We’ll show you your new rate, estimated monthly payment, break-even point, and total savings — all in plain English.
We serve homeowners across Michigan, Arizona, Florida, and Texas.
📞 Call us at (248) 459-5511
✅ Or get started online — we’ll have numbers for you fast.
