What is a rate-and-term refinance?

A rate-and-term refinance can also be called a traditional refinance or a no-cash-out refinance. Whatever you call it, a rate-and-term refinance is a loan option that may lower your monthly payment or help you pay off your home sooner. Changing interest rates, an increase in home or investment property value or an improved credit score are all reasons to choose rate-and-term refinancing.

You could benefit if current interest rates are lower than when you acquired your mortgage. You might also qualify for a better rate if your personal debt has decreased, or if your credit has improved.

When you refinance, you may be able to shorten the length of your mortgage loan term to build equity faster or pay off your home quicker. Or you may be able to extend your loan term and benefit from a lower monthly payment. We offer a range of loan terms for rate-and-term refinancing.

When you refinance, you may be eligible to change the type of loan you have. For instance, if you have an adjustable-rate mortgage (ARM) reaching the end of its fixed period, refinancing to a conventional fixed-rate loan may give you more predictability.

With a rate-and-term refinance, the principal remaining from your previous mortgage stays the same as long as you pay your closing costs up front. This means you can continue to build the equity in your home – which is great news! A rate-and-term refinance is different from a cash-out refinance in that it doesn’t pull funds from the equity in your home.

Compare your refinance loan options.

Here are some of our popular options for a rate-and-term refinance. Or you can compare all loans and rates.

Conventional fixed-rate refinance loans

Why it may be right for you:

  • Keeps the same interest rate for the life of the loan
  • Rate consistency can help with budgeting
  • You plan to stay in the home for a long time
Conventional 30-year term
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Adjustable-rate mortgage (ARM) refinance loans

Why it may be right for you:

  • Initial ARM rates are lower than comparable fixed-rate loans
  • Initial rate periods last 5–10 years, and then rates can adjust up or down
  • You plan to move within the next few years
Conventional 10/6 ARM
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FHA refinance loans

Why it may be right for you:

  • Keeps the same interest rate for the life of the loan
  • Down payments can be lower
  • Qualification guidelines are more flexible than other loans
FHA 30-year term
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These rates are based on some standard assumptions as described below.1 Learn more about interest rates and annual percentage rates (APRs).2 Plus, see an estimated conforming fixed-rate monthly payment and APR example.3

Want to see how much you could save by refinancing?

Calculate your refinance savings

Requirements and qualifications for a rate-and-term refinance.

Credit score – The minimum credit score needed for some mortgages is around 620. Government-backed mortgages like Federal Housing Administration (FHA) loans typically have lower credit requirements than conventional fixed-rate loans and adjustable-rate mortgages (ARMs).

Check your score

Home equity – As a general rule, you should have at least 20% equity in your home before refinancing. If you have less than 20%, you may be able to refinance, but you may also be required to pay private mortgage insurance (PMI). Then again, if your home value has increased or you have 20% or more equity in your home, a rate-and-term refinance could help you eliminate PMI.

Closing costs – If you refinance, you’ll be required to pay closing costs similar to when you purchased your home. While closing costs vary, you should expect to pay between 2% and 5% of the loan amount. So, on a $250,000 home loan, you could pay between $5,000 and $12,500 in closing costs. You may be able to roll these costs into your new mortgage, but it will increase the principal you must repay.

Calculate your closing costs

Looking for other refinance and loan options?

Cash-out refinance

Access to cash at closing

  • Replaces your existing mortgage
  • Creates new mortgage terms
  • Has closing costs similar to first mortgage
Learn more

Home equity loan

Better for one-time expenses

  • Fixed interest rates
  • A predictable repayment schedule
  • Terms up to 30 years.4
Learn more

Home equity line of credit

Better for ongoing access to funds5

  • Rates typically lower than credit cards
  • Flexible repayment options
  • The option to lock in a fixed rate
Learn more

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Disclosures

Loan approval is subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rate and program terms are subject to change without notice. Mortgage, Home Equity and Credit products are offered through U.S. Bank National Association. Deposit products are offered through U.S. Bank National Association. Member FDIC.

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  1. The rates shown above assume you have a FICO® Score of 740+ and at least 25% equity for a conventional fixed-rate loan, an adjustable-rate mortgage (ARM) loan or a jumbo loan, at least 3.5% equity for an FHA loan and no equity for a VA loan. They also assume the loan is for a single-family home as your primary residence and you will purchase up to one mortgage point. Mortgage points, or discount points, are a form of prepaid interest you can choose to pay up front in exchange for a lower interest rate and monthly payment. One mortgage point is equal to about 1% of your total loan amount, so on a $250,000 loan, one point would cost you about $2,500. Connect with a mortgage loan officer to learn more about mortgage points.

  2. Annual percentage rate (APR) represents the true yearly cost of your loan, including any fees or costs in addition to the actual interest you pay to the lender. The APR may be increased after the closing date for adjustable-rate mortgage (ARM) loans.

  3. Conforming fixed-rate estimated monthly payment and APR example: A $464,000 loan amount with a 30-year term at an interest rate of 6.500% with borrower equity of 25% and no discount points purchased would result in an estimated monthly principal and interest payment of $2,933 over the full term of the loan with an annual percentage rate (APR) of 6.667%.

    Estimated monthly payment and APR calculation are based on borrower equity of 25% and borrower-paid finance charges of 0.862% of the base loan amount. If the borrower equity is less than 20%, mortgage insurance may be required, which could increase the monthly payment and the APR. Estimated monthly payment does not include amounts for taxes and insurance premiums and the actual payment obligation will be greater.

  4. Home Equity Loan: As of March 15, 2024, the fixed Annual Percentage Rate (APR) of 7.65% is available for 10-year second position home equity installment loans $50,000 to $99,999 with loan-to-value (LTV) of 60% or less. Rates may vary based on LTV, credit scores or other loan amount. In order to receive the lowest rate advertised, a set-up of automatic payments from a U.S. Bank personal checking or savings account is required but neither are required for loan approval. Clients in certain states are eligible to receive the preferred rate without having automatic payments from a U.S. Bank personal checking or savings account. Loan payment example: on a $50,000 loan for 120 months at 7.65% interest rate, monthly payments would be $597.43. Payment example does not include amounts for taxes and insurance premiums. The monthly payment obligation will be greater if taxes and insurance are included and an initial client deposit may be required if an escrow account for these items is established. Home equity loans not available for properties held in a trust in the states of Hawaii, Louisiana, New York, Oklahoma and Rhode Island. Loan approval is subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rates and program terms are subject to change without notice. Property insurance is required. Other restrictions may apply.

  5. Home Equity Line of Credit: The Annual Percentage Rate (APR) is variable and is based upon an index plus a margin. The APR will vary with Prime Rate (the index) as published in the Wall Street Journal. As of September 19, 2024, the variable rate for Home Equity Lines of Credit ranged from 8.45% APR to 12.10% APR. Rates may vary due to a change in the Prime Rate, a credit limit below $50,000, a loan-to-value (LTV) above 60% and/or a credit score less than 730. A U.S. Bank personal checking account is required to receive the lowest rate, but is not required for loan approval. Clients in certain states are eligible to receive the preferred rate without having a U.S. Bank personal checking account. The rate will never exceed 18% APR, or applicable state law, or below 3.25% APR. Choosing an interest-only repayment may cause your monthly payment to increase, possibly substantially, once your credit line transitions into the repayment period. Repayment options may vary based on credit qualifications. Interest-only repayment may be unavailable. Loans are subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rates and program terms are subject to change without notice. Credit line may be reduced or additional extensions of credit limited if certain circumstances occur.

    An early closure fee of 1% of the original line amount, maximum $500, will apply if the line is paid off and closed within the first 30 months. Property insurance is required. Other restrictions may apply. An annual fee of up to $75 may apply after the first year and is waived or discounted with an existing U.S. Bank Platinum Checking Package or with enrollment in our Smart Rewards Program. Annual fees are assessed based on the tier in our Smart Rewards Program on your HELOC anniversary date. Please refer to your Smart Rewards terms and conditions for more information on tier assignment.

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