Lower Your Monthly Payment
Compare the proposed payment with what you pay now, then weigh the closing costs and repayment term. A lower payment can improve cash flow, but it does not automatically mean a lower total borrowing cost.
Home Refinance
Rate and Term Refinance
Would a new mortgage put you in a better position? Whether your goal is a lower payment, a faster payoff, or a fixed interest rate, we help you compare your current loan with available options and understand the costs before you decide.
Personal guidance from Dylken Home Loans, an independent mortgage brokerage led by Chad Holte, who brings 25+ years of mortgage experience. Serving Texas, Florida, Minnesota, and Colorado.
Understand the Basics
What Is a Rate and Term Refinance?
A rate and term refinance replaces your existing mortgage with a new loan to change the interest rate, repayment term, or loan program. Its primary purpose is to restructure the mortgage, rather than provide cash for other spending. Eligible costs may be included in the new loan, so the balance can increase even without a cash out refinance.
Start With Your Goal
What Would You Like Your Mortgage to Do Better?
The right comparison depends on what you want to accomplish. We compare wholesale lenders and loan structures, then explain the tradeoffs in plain language.
Pay Off Your Mortgage Sooner
Refinancing into a shorter term, such as 15 or 20 years, can help you pay off your home sooner and reduce total interest. Your monthly payment may increase, so we compare the payment difference with the interest savings and your preferred payoff date.
Move to a Fixed Interest Rate
If your adjustable rate mortgage is approaching a reset, compare a fixed rate option with the terms of keeping the existing loan. A fixed rate stabilizes principal and interest; taxes and insurance can still change.
Reduce or Eliminate Mortgage Insurance
If you pay mortgage insurance, refinancing may help reduce or eliminate that expense. For example, an eligible FHA borrower with sufficient equity may qualify for a conventional loan without PMI. We compare the insurance savings with the new interest rate and closing costs to see whether the change is worthwhile.
Look Beyond the Rate
Compare Your Current Mortgage With the New Loan
A lower rate is only part of the decision. Compare both loans over the same period so the payment, costs, and remaining debt tell a complete story.
The Numbers We Review Together
- Loan amount
- Compare your current balance, actual payoff amount, and new loan amount. Identify any fees or prepaid items included in the new balance.
- Monthly payment
- Compare principal and interest plus applicable mortgage insurance. Keep tax and insurance estimates consistent so a smaller escrow estimate does not look like loan savings.
- Repayment time
- Compare the years left on your current mortgage with the new term and the date you want to be mortgage free.
- Costs and credits
- Review the rate, points, lender fees, other closing costs, credits, and cash needed to complete the refinance.
- Your expected timeline
- Compare borrowing costs and the balance remaining after the same period, such as five years, or when you expect to sell or refinance again.
Estimate When the Savings Cover the Costs
A simple break even estimate divides refinance costs after lender credits by the monthly mortgage savings.
Hypothetical example
$3,600 ÷ $200 = 18 months
If the refinance costs $3,600 after lender credits and reduces your monthly mortgage expense by $200, the simple break even estimate is 18 months.
This is a starting point, not a complete savings calculation. Financed costs, different repayment terms, and changes in the remaining balance also matter. Money collected for taxes and insurance should be separated from loan fees.
A Lower Payment Can Mean a Longer Payoff
Replacing a mortgage with 23 years remaining with a new 30 year loan spreads repayment over more years. That can help monthly cash flow, but may increase total interest. Compare a shorter term or an extra principal payment strategy if keeping your payoff date matters.
Plan the Upfront Expense
Three Ways to Handle Refinance Closing Costs
The lowest rate and the lowest cash needed upfront may be different offers. Compare the costs, credits, and payment together.
Pay Costs at Closing
Use available funds for eligible closing costs rather than adding them to the mortgage. Compare the upfront expense with the payment and interest savings, while retaining enough savings for other needs.
Include Costs in the Loan
When the program permits, eligible costs can be financed. This reduces the cash needed upfront but increases the balance and can increase interest paid. The property value and program limits still matter.
Use Lender Credits
A lender credit can cover some or all eligible costs in exchange for a higher rate than an otherwise comparable option. Compare the actual credit and payment with the alternative of paying costs yourself.
Closing cash can also include prepaid interest and money collected for taxes and insurance. Those amounts are different from lender and settlement fees. Ask which costs are financed or covered by credits and what you still need to bring to closing.
Review Your Existing Loan First
Could You Reduce Mortgage Insurance Costs?
Start by identifying the insurance on your current loan. Refinancing is one possible route, but it is not always necessary or the least expensive choice.
If You Have Conventional PMI
Ask your current servicer whether you qualify to cancel private mortgage insurance without refinancing. Requirements depend on the loan, payment history, equity, and applicable rules. If the goal is simply to remove PMI, compare that possibility before paying for a new mortgage.
If You Have FHA Mortgage Insurance
FHA mortgage insurance follows different rules from conventional PMI. Compare keeping your FHA loan with refinancing into a conventional loan. A new conventional loan at 80% loan to value or less generally avoids PMI, subject to the program. Include the new rate and closing costs rather than comparing insurance alone.
Does Another Refinance Path Fit Better?
Existing FHA Loan
An FHA streamline refinance may offer a different path for an eligible existing FHA loan. Review its benefits, costs, and requirements separately.
Explore FHA Streamline RefinanceExisting VA Loan
Eligible VA borrowers may have an IRRRL option. Compare the applicable costs and benefits with other ways to refinance the existing VA loan.
Explore VA IRRRL OptionsNeed Funds From Your Equity?
If your goal includes receiving funds for renovations or other spending, a cash out refinance involves a different comparison and eligibility rules.
Explore Cash Out RefinanceMake the Next Step Easier
What Lenders Review and What to Prepare
Gather what you have. We will explain the records and requirements for the loan options that fit your circumstances.
What Lenders Review
- Credit and payment history
The lender reviews your credit profile, mortgage payment history, and program requirements. A single advertised credit score does not determine the whole application.
- Income and monthly obligations
Document income that qualifies under the selected program, including employment, retirement, or self employment as applicable. The review also considers your housing expenses and other debts.
- Equity, property, and occupancy
The lender reviews the loan amount relative to the accepted property value, property eligibility, and whether the home is a primary residence, second home, or investment property.
A property value review is part of the process. Some eligible loans qualify for value acceptance without a new appraisal; others require an appraisal or additional property information.
- Existing financing
Identify all mortgages, home equity lines, and prior cash out transactions. These details can affect eligibility, loan classification, and the available refinance options.
Information to Have Ready
- Current mortgage details
A recent mortgage statement and information about any second mortgage or home equity line. The lender obtains the payoff needed for closing.
- Income records
Recent pay statements and W2s, retirement benefit statements, or business and tax records as appropriate for the income used to qualify.
Own a business or earn contract income? Standard financing may still be available. Review self employed income documents.
- Funds and property information
Account statements when needed, homeowners insurance information, property tax details, and applicable association dues.
- Your goals and timing
Your estimated property value, preferred payment or payoff goal, and how long you expect to keep the home and mortgage.
Common Questions
Rate and Term Refinance Questions
Practical answers to help you compare your options.
How much does my rate need to drop before refinancing makes sense?
There is no single rate reduction that makes every refinance worthwhile. Compare the loan amount, monthly payment, costs, repayment term, and how long you expect to keep the loan. A small rate change may be useful on a larger balance with modest costs, while a larger reduction can still be a poor fit if the costs are high or you plan to sell soon.
Can my loan balance increase even if I am not taking cash out?
Yes. Eligible closing costs, prepaid items, and amounts needed to pay off the existing mortgage may be included when the program allows. That can make the new balance higher without turning the transaction into a cash out refinance. We explain the difference between your current balance, payoff amount, and proposed loan amount.
Can I refinance without starting another 30 year loan?
Yes. Depending on available programs and qualification, you can compare a shorter repayment term. You can also ask about paying extra principal on a longer term loan. Compare the required payment, flexibility, interest cost, and intended payoff date rather than assuming a new 30 year term is your only choice.
What does a refinance with no closing costs actually mean?
It generally means costs are covered through lender credits associated with a higher rate, included in the loan when permitted, or handled through a combination of these approaches. The costs do not disappear. Ask which charges are covered and what you still need to pay at closing.
Will I need a new appraisal?
Not always. Some eligible applications qualify for value acceptance without a new appraisal. Others need an appraisal or additional property information. The loan program, property, application, and lender determine the required review; an online home value estimate does not establish eligibility.
Can I remove mortgage insurance without refinancing?
Possibly, if you have conventional PMI and meet the applicable cancellation requirements. Ask your current servicer about that option before paying to refinance solely to remove PMI. FHA mortgage insurance follows different rules. Compare any replacement mortgage with the full cost of keeping your existing loan.
What happens if I already have a home equity loan or line of credit?
Tell us about it early, even if the line has no current balance. If you keep it, its lender may need to agree to remain behind the new first mortgage, which is called subordination. Paying it off can affect the refinance classification depending on how the funds were used and the selected program.
Can I refinance if I am retired or self employed?
Yes, when your qualifying income, credit, property, and overall application meet the program requirements. Retirement and business ownership do not automatically require alternative financing. We review the appropriate income and asset documents for your situation and explain what the lender needs.
Sources and mortgage guidance
Reviewed October 20, 2026. Individual program and lender requirements apply.
See Whether a Refinance
Makes Sense for You
Tell us about your current mortgage and what you want to improve. We will help you compare lenders, understand the costs, and choose your next step, including keeping your existing loan when that fits better.