A rate and term refinance allows you to lower your rate, change your loan program (e.g., 5 year ARM to a 30 year fixed) or both. If you would like to take advantage of lower rates and a different loan program this type of refinance loan is a good option.
Say you’re looking to trade your 7-year adjustable rate mortgage for long-term stability. A fresh 30-year fixed rate loan could be your best bet. If you’re not ready to restart the clock on a new 30-year refinance, consider a lower rate and pay off your mortgage faster with a 15-year loan. Refinancing your rate and term could lower your monthly mortgage payments.