A rate-term refinance allows homeowners to replace their existing mortgage with a new loan that offers a lower interest rate, a different loan term, or both. The primary goal of this refinance is to reduce overall borrowing costs, lower monthly payments, or help homeowners pay off their mortgage faster. Unlike a cash-out refinance, a rate-term refinance does not provide extra cash—it strictly focuses on improving loan terms. This option is ideal for those looking to secure a more stable financial future, whether by switching from an adjustable-rate mortgage (ARM) to a fixed-rate loan or shortening their loan term to build equity faster.