- Rate-and-term refinances allow you to change the interest rate and term of your existing mortgage. This can be a good option if you want to lower your monthly payments, shorten the term of your loan, or get a better interest rate.
- Cash-out refinances allow you to borrow against the equity in your home. This can be a good option if you need to consolidate debt, make home improvements, or pay for other expenses.
What are the pros and cons of each type of refinance?
Rate-and-term refinances
- Pros: Can lower your monthly payments, shorten the term of your loan, or get a better interest rate.
- Cons: May not be worth the cost if your current interest rate is already low or if you’re close to paying off your mortgage.
Cash-out refinances
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