Licensed in California · NMLS #362311
EZOnline MortgageCalifornia Home Loans
(818) 305-6704Apply now
EZOnline MortgageCalifornia Home Loans
Apply
Home›Refinance›Rate-and-Term Refinance
Refinance · Refinance Types

Rate-and-Term Refinance in California: Improve Your Loan Without Taking Cash

A rate-and-term refinance changes your interest rate, your loan length, or both — without pulling cash out of your home. It is the most common kind of refinance. This page explains how it works, why people use it, and when it makes sense, in plain language.

If your goal is a lower rate, a lower payment, a shorter term, or moving from an ARM to a fixed loan, this is usually the refinance you want.

A bright modern living room in a California home refinanced with a rate-and-term loan
Quick answer

A rate-and-term refinance replaces your current mortgage with a new one that has a better rate, a different term, or both — and you do not take cash out. People use it to lower their rate, lower their payment, pay off faster, or switch from an adjustable rate to a fixed rate. Because no cash is taken, it often has simpler rules than a cash-out refinance.

What this means

There are two main reasons to refinance:

A rate-and-term refinance is the "tune-up." You keep your loan balance about the same, but you change the rate, the term, or the type. This is different from a cash-out refinance, where your loan gets bigger. See Cash-Out Refinance.

Rate-and-term: Improve your loan terms (no cash out).
Cash-out: Borrow more than you owe and take the difference as cash.
Step by step

How It Works (Step by Step)

1
Set your goal. Lower rate, lower payment, shorter term, or leave an ARM.
2
Get a loan estimate. A lender shows your new rate, payment, and costs.
3
Choose your new term. For example, a new 30-year, or a 15-year to pay off faster.
4
Appraisal (often). The lender confirms your home's value.
5
Underwriting. The lender reviews your credit and income.
6
Close. Your old loan is paid off and replaced with the new one.

Common Goals (and How Rate-and-Term Helps)

GoalHow rate-and-term helps
Lower my rateReplace a higher rate with a lower one. See Lower My Rate
Lower my paymentLower rate and/or longer term reduces the payment
Pay off fasterSwitch to a shorter term like 15 years. See Pay Off Faster (Term Change)
Leave an ARMMove to a fixed rate for stability. See ARM to Fixed Refinance

Requirements (At a Glance)

RequirementTypical rate-and-term rule
EquityLess equity needed than cash-out
Credit scoreOften 620+ (higher helps)
IncomeMust show ability to repay
AppraisalOften required
PropertyPrimary, second home, or investment (rules vary)

Benefits

Lower rate or payment. The most common reason people refinance.
Pay off faster. Switch to a shorter term if you can handle a higher payment.
Escape an ARM. Lock in a fixed rate for peace of mind.
Simpler than cash-out. Often easier rules since you are not borrowing more.
Can remove PMI in some cases as equity grows. See Remove PMI.

Potential Drawbacks (The Honest Part)

Closing costs. You pay fees to set up the new loan.
Restarting the clock. A new 30-year loan can add interest over time.
Break-even matters. If you move soon, you may not recover the costs.
Appraisal risk. A low value can change your options.
Real-world California examples

What it looks like in practice

Example 1 — Lower rate in Fresno.
Example 1 — Lower rate in Fresno.

Carlos refinances from a higher rate to a lower one. His balance stays about the same, but his monthly payment drops. He plans to stay long enough to pass his break-even point.

Example 2 — Shorter term in San Diego.
Example 2 — Shorter term in San Diego.

Aisha switches from a 30-year to a 15-year loan. Her payment goes up, but she will pay off her home years sooner and save on total interest. See Pay Off Faster (Term Change).

Example 3 — ARM to fixed in San Jose.
Example 3 — ARM to fixed in San Jose.

The Kim family had an ARM that is about to adjust. They refinance into a fixed-rate loan so their payment cannot rise. See ARM to Fixed Refinance.

Examples are for learning only. Your savings and terms depend on your loan and the market.

Common mistakes

1Forgetting closing costs. Always include them in your decision.
2Restarting a 30-year loan without thinking. It can add years of interest.
3Refinancing for a tiny rate drop. The savings may not cover the cost.
4Ignoring your timeline. Moving before break-even loses money.
5Not comparing cash-out. If you also need cash, compare both. See Cash-Out Refinance.
6Skipping the break-even math. See Refinance Check-Up (Is it worth it).
Good questions

Frequently asked questions

A refinance that changes your rate, your loan term, or both, without taking cash out.

Next steps

The go-to choice for a better loan

A rate-and-term refinance is the go-to choice when your goal is a better loan, not cash. Start with the break-even math, then pick the term that fits your plan. EZ Online Mortgage can compare new terms side by side so you can choose the loan that best fits your goal.

Start Refinance Rates (818) 305-6704
Keep learning

This page is for education only. It is not a loan offer or a promise of approval, rates, savings, or terms. Your results depend on your individual circumstances. Equal Housing Opportunity · NMLS #362311 · CA DRE #01871814.

CallStart my application