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Rate & Term Refinance: Your Path to Lower Payments
Flexible rates. Better terms. Smarter paths to saving on your mortgage with Rize Mortgage.
What Is a Rate and Term Refinance?
A rate and term refinance replaces your current mortgage with a new one, primarily to change your interest rate and the loan term (the length of time you must repay it). It's the most common type of refinancing and a powerful tool for homeowners who want to reduce their monthly payment or pay off their loan faster.
You can’t take extra cash; it just covers the loan and costs.
It’s good if your credit’s better, rates are lower, or you want a new term.
Can be used for primary & second home, or investment property.
Benefits of a Rate and Term Refinance
Refinancing your mortgage with a rate and term loan is a popular choice because it gives you control over your largest monthly expense. When market conditions or your financial profile improves, this is the first step to securing a better financial future with Rize Mortgage.
Secure a lower interest rate
If rates have dropped since you first bought your home, a rate and term refinance can lock in a new, lower rate, leading to significant savings over the life of the loan.
Lower your monthly payment
By reducing your interest rate or extending your loan term (e.g., from a 15-year to a 30-year), you can reduce your required monthly payment, freeing up cash flow for other needs.
Shorten your loan term
Moving from a 30-year to a 15-year mortgage can help you pay off your home faster, save thousands in interest, and build home equity at a much quicker pace.
Convert an ARM to a fixed rate
Eliminate the uncertainty of a fluctuating payment by switching your ARM to a stable, predictable fixed-rate loan.
Remove Private Mortgage Insurance (PMI)
If your home's value has increased, you may be able to refinance and eliminate the monthly cost of PMI if your new loan-to-value (LTV) is 80% or less.
Rate and Term Refinance Loan Types
The rate term refinance is a flexible concept that applies across many different mortgage programs. If you're comparing refinancing options, we will guide you step-by-step so you can pick the path that minimizes total cost while matching your financial goals. Here are the common ways homeowners use this refinancing option:
Conventional Rate & Term Refinance :
The standard refinance option for homeowners with good credit and equity.
FHA Rate & Term Refinance :
Allows a new rate and term without requiring a large amount of equity.
VA Interest Rate Reduction Refinance Loan (IRRRL) :
A streamlined refinance for Veterans to lower their existing VA loan interest rate.
USDA Rate & Term Refinance :
Designed for eligible rural homeowners to reduce the rate on a USDA loan.
Investment Property Refinance :
Helps you secure better terms on rental or investment properties.
Rate and Term Refinance Requirements
Below are the common refinance home loan requirements we need. These are guidelines that Rize Mortgage reviews; we review each application holistically and can help you navigate your options.
Credit Score
Generally, a minimum score of 620 or higher works, but higher scores will always help you secure the best possible interest rate.
Loan-to-value (LTV)
This is your new loan amount compared to your home's appraised value. For a standard rate and term refinance, you need to retain at least 3-5% equity.
Debt-to-income (DTI)
We look for a DTI of 45% or less to ensure you can comfortably handle the new mortgage payment, though exceptions can happen depending on the full picture.
Payment history
You'll need a solid history of making on-time mortgage payments for the last 6–12 months on your existing loan.
Documentation
You’ll need to show steady income and employment with pay stubs, W-2s, and bank statements. Self-employed borrowers will need tax returns.
Property requirements
The home should meet basic standards for financing. The property type (single-family, condo, etc.) must be eligible for the specific program you choose.
How to Get a Rate and Term Refinance with Rize Mortgage
Getting a rate and term refinance is made easy with the expert loan officers at Rize Mortgage who guide each step, explain options (fixed vs. ARM, term length, PMI removal), and help you choose a plan that fits your financial goals.
Check your estimate :
Use our Refinance Calculators to estimate your new monthly payment and potential savings.
Apply & get a personalized quote :
Provide documents such as current mortgage statements and bank statements for verification.
Appraisal & valuation :
We order an appraisal to confirm your property’s value and loan-to-value ratio.
Loan processing & underwriting :
Our team reviews your documents, processes your loan, and keeps you updated throughout.
Rate lock & closing :
Lock your new interest rate, review final terms, and complete the refinance at a local title company.
Tips to get the best Rate & Term Refinance terms
1
Target the 80% LTV mark
If your current Loan-to-Value (LTV) is close, try to make an extra principal payment or two.
2
Know your break-even horizon
Buy discount points if you plan to stay in the home long enough to make it worth the cost.
3
Manage existing debt
To keep your DTI ratio good, avoid co-signing loans or adding a lot of credit card debt while refinancing.
4
Compare the Loan Estimate and CD
Compare the initial Loan Estimate with the Closing Disclosure to confirm the rate and fees.
5
FAQ (Frequently Asked Questions)
Can You Incorporate Fees into a Rate and Term Refinance?
Yes, many lenders allow you to roll closing costs and fees into your new loan balance during a rate and term refinance. This option helps reduce upfront expenses but slightly increases your loan amount and monthly payment. Typical fees include appraisal, title, and lender charges.
What is No Cash-Out Rate and Term Refinance?
A no cash-out rate and term refinance is when you replace your current mortgage with a new loan to change the interest rate, loan term, or both—without taking out extra cash. Unlike cash-out refinancing, this option focuses only on reducing monthly payments or paying off the loan faster. It’s common when interest rates drop or borrowers want to switch from an adjustable-rate mortgage (ARM) to a fixed-rate loan.
What is the Rescission Period for Rate and Term Refinance?
The rescission period is a 3-business-day window after closing during which you can cancel a refinance on your primary residence. This consumer protection, required under federal law (Truth in Lending Act), gives homeowners time to reconsider the loan terms before they become final. It applies to most refinances but not to loans on second homes or investment properties.
Does Refinancing a Mortgage Hurt Your Credit?
Refinancing can temporarily lower your credit score, but the impact is usually small and short-term. Credit checks (hard inquiries) and opening a new loan account affect your score. However, making on-time payments on the new loan can quickly rebuild credit strength.
What is the Maximum LTV for a Rate and Term Refinance?
The maximum loan-to-value (LTV) ratio for a rate and term refinance depends on the loan type: typically up to 97% for conventional loans, 97.75% for FHA loans, and 100% for VA loans. LTV is the loan balance compared to your home’s value, and lenders use it to measure risk. A lower LTV often qualifies you for better rates. USDA refinance programs also allow up to 100% LTV in some cases.
Ready to see your Rate and Term Refinance options?
Pre-qualify in minutes or speak with a local loan officer to get a tailored plan and start saving on your monthly mortgage payment with Rize Mortgage.
