Rate-Term Refinance
“I want to lower my rate or change my loan term.”
A rate-term refinance replaces your current home loan with a new one that better fits where you are today. Most homeowners refinance to secure a lower interest rate, adjust their loan term, or make their monthly payment feel more manageable.
What Is Rate-Term Refinance?
A rate-term refinance replaces your current home loan with a new one that better fits where you are today. Most homeowners refinance to secure a lower interest rate, adjust their loan term, or make their monthly payment feel more manageable.
At ALCOVA Mortgage, we look at refinancing as a way to realign your mortgage with your life. Maybe rates have changed. Maybe your goals have. Either way, it’s worth understanding what’s possible.
Who This May Be Right For
- Want to lower your interest rate compared to your current mortgage
- Are looking to reduce your monthly mortgage payment
- Would like to shorten your loan term and build equity faster
- Want to move from an adjustable-rate mortgage to a fixed-rate loan
- Have built enough equity to potentially remove mortgage insurance
- Want your mortgage to better reflect where you are financially today
Benefits and Considerations of a Rate-Term Refinance
- Opportunity to lower your interest rate
- Potential to reduce your monthly mortgage payment
- Ability to shorten your loan term and pay off your home sooner
- Option to switch loan types (such as adjustable-rate to fixed-rate)
- Possibility of removing mortgage insurance if sufficient equity exists
- Closing costs and fees typically apply
- Extending your loan term may increase total interest paid over time
- Eligibility depends on credit, equity, and current lending guidelines
- Market interest rates impact potential savings
- A refinance creates a new loan with new terms and timelines
When Refinancing Makes Sense
- Interest rates are lower than your current mortgage rate
- You want to improve your monthly budget by adjusting your payment
- You want to pay off your home faster with a shorter loan term
- You prefer the stability of a fixed-rate mortgage
- You’ve built enough equity to eliminate mortgage insurance
Frequently Asked Questions
How soon can you do a rate-term refinance after buying a home?
Some rate-term refinance options may be available relatively soon after closing, while others require a waiting period. The timeline depends on the loan program and guidelines. A loan officer can help review your specific situation and available options.
Does a rate-term refinance affect your credit score?
Applying for a rate-term refinance usually involves a credit inquiry, which is a normal part of the mortgage process. This may have a small, temporary impact on your credit as your application is reviewed.
Do you need an appraisal for a rate-term refinance?
Many rate-term refinance loans require an appraisal to confirm your home’s current value. In some cases, appraisal waivers may be available depending on the loan program and eligibility.
Does a rate-term refinance restart your mortgage?
A rate-term refinance replaces your existing loan with a new one, which means your repayment timeline may reset depending on the loan term you choose. Some borrowers select shorter terms to pay off their loan faster.
How do you know if a rate-term refinance makes sense?
The best way to determine if a rate-term refinance makes sense is to review your current loan, home value, and financial goals. A loan professional can help you compare options and understand what may improve your situation. *Refinancing may result in increased total life of loan finance charges over your current obligation.
Explore other loan programs
Let’s talk numbers.
Talk to a Dream Team loan officer about the Rate Term Refinance and find out if it’s your best option.
ALCOVA Mortgage, LLC — NMLS #40508 (www.nmlsconsumeraccess.org). Equal Housing Lender. Informational only; not a commitment to lend. All loans subject to underwriting approval.