Refinance
Also called: refi, rate and term refinance
Replacing an existing mortgage with a new one to change the rate, the term, or both.
A rate-and-term refinance changes the pricing or payoff schedule without taking cash out. Because it is a new loan, it comes with new closing costs and new underwriting.
The decision is a break-even: the costs divided by the monthly saving gives the months required to come out ahead. A lower rate that resets you to a fresh thirty-year schedule can still increase total interest paid.
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Related terms
- Cash-out refinanceRefinancing for more than you owe and taking the difference in cash, converting equity into spendable funds.
- Streamline refinanceA reduced-documentation refinance available on some government-backed loans when the result benefits the borrower.
- Closing costsThe lender, title, and third-party fees due at closing: separate from your down payment.
- RecastRe-amortizing an existing loan after a large principal payment, lowering the monthly payment while keeping the rate and term.
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