rate and term refinance - Refinancing the interest rate and or financning terms of your home loan. No cash is given to borrower at the closing. Used by borrowers who purchased when rates were high and do not need cash back just lower monthly payments.Rate and Term refinance only changes the rate or term of the loan, not the amount. So your remaining balance at time of refinance is used to determine your loan amount.
Usually when you do a rate and term refinance, your mortgage interest rate is usually lower because your LTV will probably be lower and the bank will assume you are doing well financially if you do not need any cash.
When it is time to change your rate or your term, many smart customers recognize the opportunity to use the equity they have built in their homes to obtain extra cash from the bank and make what is often their greatest investment, their house, start working for them by enabling them to reinvest in their property, their education, or in other investment opportunities at a very low cost of capital.
