Rate-and-term refinance is a popular mortgage solution for clients who want to save on their mortgages over time. When you close on a rate-and-term refinance, your old mortgage is replaced with a new one of the same monetary value, but with different interest rates or maturity to suit your needs. This differs from cash-out refinance, in which a higher-value loan replaces an existing mortgage, and a borrower receives a cash payment for the difference. If you’re interested in refinancing, Aaron McDaniel – Cherry Creek Mortgage is a mortgage professional serving Keller, Denton County, Frisco, and Irving, TX, who can help. Read on to learn more about the basics and benefits of rate-and-term refinance and contact us for a free quote.
There are many ways to take advantage of rate-and-term refinancing. Some clients want a longer term, which lowers monthly payments. Others choose a shorter term, so they can pay off their mortgages faster and with less interest. Still others simply want to take advantage of low interest rates and keep the same terms.
Common Reasons for Rate-and-Term Refinance
We commonly see rate-and-term refinance clients who previously had an adjustable-rate mortgage (ARM) and want to refinance to a fixed rate. ARMs have changing interest rates that can be difficult to adjust to, and some clients want a simple, consistent monthly payment.
We also work with several clients who have been working in recent years to improve their credit score and financial standing. Homeowners who previously were ineligible for conventional financing may now find themselves in a better position to get approved for a mortgage with a more competitive interest rate.
Changes in a homeowner’s family can also precipitate a refinance. Getting married, for example, may mean extra income to pay off a mortgage faster, so these clients may want a shorter term and to pay less interest over time. A death in the family might mean a client wants to extend a term for more financial stability.
It’s important to note that there are closing costs involved in a rate-and-term refinance. In some cases, however, they may be incorporated into the loan itself, so little up-front cash is required.
A Better Mortgage May Be Waiting
If you’re worried that you’re paying too much in interest, would like a lower monthly payment, or want to pay off your loan faster or slower than you are currently, we can help. Aaron McDaniel – Cherry Creek Mortgage is a skilled mortgage broker who can help you carefully review your options and compare rates. Our team offers free quotes and are here to answer your questions. If you live in Keller, Denton County, Frisco, or Irving, contact us to get started.