Rate & Term Refinance for Washington Homeowners
A rate and term refinance replaces your existing mortgage with a new one that has a different interest rate, loan term, or both — without taking significant cash out.
This option is often used by homeowners who want to lower their monthly payment, reduce interest over time, or change the structure of their loan.
Why Homeowners Choose a Rate & Term Refinance
You may want to consider a rate and term refinance if you want to:
- Lower your interest rate
- Reduce your monthly mortgage payment
- Shorten your loan term (e.g., 30-year to 15-year)
- Switch from an adjustable-rate mortgage to a fixed rate
- Improve long-term interest savings
How a Rate & Term Refinance Works
- Your current loan is paid off
- A new loan is created with updated terms
- Closing costs may be paid upfront or rolled in
- Loan amounts are subject to current loan limits depending on the program and loan-to-value (available home equity) guidelines
- Your new mortgage payment typically starts the month following your closing (confirm this with your mortgage professional)
- The existing balance of your reserve account for property taxes and insurance are either refunded to you after closing from your current mortgage service or applied to the new mortgage.
Things to Consider
- How long you plan to keep the home
- Your break-even point (costs vs. savings)
- Whether a shorter term fits your budget
- Current market conditions
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