What Is a Rate & Term Refinance?

A rate and term refinance pays off your existing mortgage with a new loan for roughly the same balance. Instead of pulling out equity as cash, the goal is to improve the terms of your loan. You might lower your interest rate, shorten or extend your repayment period, or move from one loan type to another. If your goal is to access equity instead, a cash-out refinance may be a better match.

Common Reasons to Refinance

Lower Your Interest Rate

If market rates have dropped, or your credit and finances have improved since you got your loan, you may qualify for a lower rate, which can reduce both your payment and the total interest you pay.

Reduce Your Monthly Payment

A lower rate, a longer term, or both can reduce what you pay each month, freeing up cash flow for other priorities.

Shorten Your Loan Term

Moving from a 30-year loan to a 15-year or 20-year term can help you build equity faster and save significantly on interest, though your monthly payment may rise.

Switch From an Adjustable to a Fixed Rate

If your adjustable-rate mortgage is approaching a rate change, refinancing into a fixed rate can bring stability and predictability to your payments.

Remove Mortgage Insurance

If your home has appreciated and you’ve built equity, refinancing may help you eliminate private mortgage insurance or move from an FHA loan into a conventional loan, depending on your situation.

Change Loan Programs

Some homeowners refinance to switch loan types, such as moving into a program that better matches their current finances or goals.

Does Refinancing Make Sense? Understanding Your Break-Even Point

Refinancing involves closing costs, so the key question is how long it takes for your monthly savings to outweigh those costs. Here’s a simple illustration:

In this example, if you plan to stay in the home longer than about 20 months, the refinance could pay off. These numbers are for illustration only, and your actual costs and savings will vary. Paulo and Alex will run the real numbers with you, and you can also try the refinance calculator and the “should I refinance?” calculator.

When Refinancing May Not Be the Right Move

Refinancing isn’t always beneficial. It may not make sense if:

• You plan to move soon, before you’d recover closing costs
• The rate reduction is too small to offset costs
• Extending your term would significantly increase total interest
• You’re close to paying off your mortgage
• Your credit or equity has declined since you got your current loan

Being honest about these possibilities helps you avoid a refinance that doesn’t serve you.

Choosing the Right Term

Your term choice shapes both your monthly payment and your long-term cost:

• Longer terms lower your monthly payment but usually increase total interest
• Shorter terms raise your monthly payment but can save you a lot of interest and help you pay off the home sooner
• Staying near your current remaining term can lower your rate without restarting the clock

Paulo and Alex can show you different term scenarios side by side so you can pick the one that fits your budget and goals. You can also look into temporary buydowns or an adjustable-rate option if they match your plans.

Refinancing for Self-Employed Homeowners

Self-employed homeowners sometimes find it harder to refinance because tax returns may understate their income. If that’s you, alternative documentation programs may help, including bank statement loans, 1099 loans, and profit and loss loans.

Government-Backed and Specialty Refinance Options

Depending on your current loan, you may have additional options:

• VA loan borrowers may qualify for a streamlined refinance, often called an IRRRL
• FHA loan borrowers may have access to streamline options
• Investors may refinance rental properties through a DSCR loan
• Homeowners with high-value properties may explore jumbo refinancing

Programs and requirements vary, so Paulo and Alex will confirm what applies to you.

What Lenders Typically Review

For most refinances, lenders look at:

• Your credit history and score
• Your income and employment
• Your current loan balance and payment history
• Your home’s value and equity
• Your overall debts and monthly obligations

The Rate & Term Refinance Process, Step by Step

1. Mortgage review: Share your current loan details and goals with Paulo or Alex.
2. Compare options: Evaluate rates, terms, costs, and break-even timing.
3. Application: Submit your information and documents.
4. Appraisal and underwriting: Your home’s value and your file are reviewed.
5. Closing: Sign your new loan documents.
6. Start fresh: Begin making payments under your new terms.

Check today’s rates and explore scenarios with the mortgage calculator as you plan.

Why Work With Paulo Maria and Alex Maria?

A good refinance starts with honest numbers. Paulo Maria (NMLS #1372655) and Alex Maria (NMLS #2120289) with Barrett Financial Group (Company NMLS #181106) provide clear guidance, responsive communication, and a wide range of loan programs, so you’ll know whether refinancing helps you before you commit.

Ready to See What a Refinance Could Do for You?

Contact Paulo Maria at (702) 219-8214 or Alex Maria at (702) 713-0536, or visit 8485 W Sunset Rd, Suite 202, Las Vegas, NV 89113, to review your mortgage and explore your rate and term refinance options.

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