Your mortgage worked then. Does it still work now?
The mortgage that helped you buy your home may not be the best fit today. A rate and term refinance can help you switch loan types, remove mortgage insurance, or move to a more stable loan that better matches your financial goals without taking cash out of your home's equity.
What is a Rate and Term Refinance?
A rate and term refinance replaces your existing mortgage with a new one to change your interest rate, repayment term, loan type, or a combination of these features. Unlike a cash-out refinance, the goal isn't to access your home's equity. Instead, it's to improve the structure of your mortgage based on where you are today. Many homeowners refinance after building equity, improving their credit, or simply realizing their original loan was the best option at the time, but not necessarily the best option now.
Highlights
Common mortgage switches
FHA Loan to Conventional Loan
FHA loans make homeownership possible for many first-time home buyers because they offer flexible qualification requirements and low down payment options. However, many FHA borrowers eventually refinance into a conventional loan after building equity. Doing so may eliminate monthly mortgage insurance, reduce long-term borrowing costs, and provide additional flexibility depending on your financial situation.
Adjustable-rate to fixed-rate
An adjustable-rate mortgage can be a great option for buyers who don't plan to stay in a home long term or who want lower initial payments. If your plans have changed, refinancing into a fixed-rate mortgage can provide consistent monthly payments and protection from future interest rate increases.
Refinancing to a different mortgage type might be worth exploring if...
- You purchased with an FHA Loan and have built equity.
- Your adjustable-rate mortgage will soon begin adjusting.
- Your financial situation has improved since you purchased your home.
- You want to eliminate mortgage insurance.
- You want more predictable monthly payments.
- Your current loan no longer aligns with your long-term goals.
Things to consider before getting a rate and term refinance
While a rate and term refinance can be a great option for many borrowers, it might not be right for everyone. Here are some things to be aware of before you refinance to switch loans:
- Every loan has different requirements
- Closing costs still apply
- The best loan choice depends on your goals
- Not every homeowner benefits from switching loan types
If you need help deciding if this is the right option for you, let us know!
How it works
1. Review your current mortgage with us
We'll evaluate your existing loan, interest rate, monthly payment, and overall financial goals.
2. Compare available loan types
We'll explain the advantages of different loan options based on your eligibility and objectives.
3. Apply for your new loan
Complete your refinance application and submit any required documentation.
4. Finalize your loan
We'll complete underwriting, order an appraisal if necessary, and prepare your closing documents.
5. Enjoy a mortgage that fits your goals
Your previous mortgage is paid off and replaced with a loan that's designed to better support where you are today.
Frequently Asked Questions
We’re here to help! Find answers to your everyday banking questions.
Yes. Homeowners commonly refinance from an FHA Loan into a conventional mortgage after improving their credit, increasing their income or building more home equity. This change may help eliminate FHA mortgage insurance, but the new loan must meet conventional credit, income, debt and property requirements.
The answer depends on the type of mortgage insurance and the new loan program. For a conventional refinance, having at least 20% equity can generally help you avoid private mortgage insurance. Borrowers with less equity may still qualify for conventional financing, but PMI could be required. Current conventional borrowers may also have cancellation options that do not require refinancing.
A fixed-rate mortgage may be worth considering if you want a consistent principal and interest payment or expect to remain in your home beyond the fixed period of your adjustable-rate mortgage. Before switching, compare your current rate, future adjustment schedule, new fixed rate, closing costs and how long you expect to keep the loan.
Potentially. You may be able to replace a USDA mortgage with a conventional loan if you meet the conventional program’s income, credit, debt, equity and property requirements. This may appeal to homeowners who have built equity or want to change the fee structure of their mortgage. USDA also offers its own refinance options for qualifying USDA borrowers, so both paths should be compared.
It may be if the new mortgage provides a clear financial or practical benefit. That benefit could include removing mortgage insurance, gaining payment stability, lowering borrowing costs or choosing terms that better support your future plans. Compare closing costs, monthly payments, total interest and the amount of time you expect to keep the loan.
Yes. Refinancing allows you to replace your mortgage while continuing to own and live in the same home. You are not required to sell the property simply because you want to move from FHA to conventional financing, replace an adjustable-rate mortgage or select another eligible loan type.
Not automatically. The new conventional loan must qualify without private mortgage insurance for the monthly insurance expense to be eliminated. This typically depends on your available equity, although other loan characteristics also matter. If the new conventional loan requires PMI, compare its cost with your current FHA mortgage insurance before refinancing.
Yes, if you qualify. An adjustable-rate mortgage may offer a lower introductory rate than some fixed-rate options, but the interest rate and payment can change after the initial fixed period. This option may make sense for someone who expects to move or refinance before adjustments begin, but it introduces more uncertainty if plans change.