top of page

Rate-and-Term Refinance

  • Definition: A refinance to change the interest rate, loan term, or both, without altering the loan balance significantly.

  • Primary Purpose: To lower the interest rate, reduce monthly payments, or change the loan term.

  • Loan Amount: Loan amount remains similar to the existing mortgage balance.

  • Impact on Equity: Minimal impact on home equity.

  • Eligibility Requirements: Standard credit, income, and equity requirements based on lender guidelines.

  • Costs and Fees: Standard closing costs, which can be rolled into the loan amount.

  • Interest Rates: Typically offers competitive interest rates, depending on market conditions and borrower qualifications.

Cash-Out Refinance

  • Definition: A refinance that replaces the existing mortgage with a new, larger loan, providing the borrower with the difference in cash.

  • Primary Purpose: To access home equity for purposes like home improvements, debt consolidation, or other expenses.

  • Loan Amount: Loan amount increases to provide the borrower with cash from home equity.

  • Impact on Equity: Reduces home equity by converting it into cash.

  • Eligibility Requirements: Higher credit and equity requirements; typically need significant home equity.

  • Costs and Fees: Higher closing costs due to increased loan amount and possibly higher fees.

  • Interest Rates: May have slightly higher interest rates due to increased loan amount and risk.

Cash-In Refinance

  • Definition: A refinance where the borrower pays down a portion of the loan balance to qualify for better terms or eliminate private mortgage insurance (PMI).

  • Primary Purpose: To lower the loan-to-value (LTV) ratio, reduce monthly payments, or eliminate PMI.

  • Loan Amount: Loan amount decreases as the borrower pays down part of the principal.

  • Impact on Equity: Increases home equity by paying down the principal balance.

  • Eligibility Requirements: Requires borrower to have cash available to pay down the principal.

  • Costs and Fees: Standard closing costs, with additional out-of-pocket payment to reduce the principal.

  • Interest Rates: May qualify for lower interest rates due to reduced LTV ratio.

Streamline Refinance

  • Definition: A simplified refinance process available for government-backed loans (FHA, VA, USDA) with reduced documentation and potentially lower costs.

  • Primary Purpose: To reduce interest rates or monthly payments with minimal paperwork and faster processing.

  • Loan Amount: Loan amount typically remains similar to the existing mortgage, though some minor adjustments may occur.

  • Impact on Equity: Little to no impact on home equity.

  • Eligibility Requirements: Must have an existing government-backed loan (FHA, VA, USDA) and meet specific lender criteria.

  • Costs and Fees: Reduced closing costs and fees, often lower than traditional refinances.

  • Interest Rates: Generally offers favorable interest rates, often lower than the original loan.

No-Closing-Cost Refinance

  • Definition: A refinance option where the lender covers the closing costs, typically in exchange for a slightly higher interest rate.

  • Primary Purpose: To refinance without paying out-of-pocket closing costs, spreading costs over the life of the loan through a higher interest rate.

  • Loan Amount: Loan amount may be slightly higher due to the higher interest rate, but closing costs are covered by the lender.

  • Impact on Equity: Minimal impact on home equity, but long-term costs may be higher due to a higher interest rate.

  • Eligibility Requirements: Standard credit and income requirements; borrower must be willing to accept a higher interest rate.

  • Costs and Fees: No out-of-pocket closing costs, but long-term costs are higher due to a higher interest rate.

  • Interest Rates: Interest rates are slightly higher to offset the lender covering the closing costs.

bottom of page