Two types of refinancing — two very different outcomes.

When most people hear “refinance,” they assume it just means lowering your mortgage rate. But there are actually two major types of refinancing — and knowing the difference can save you time, money, and guesswork.

Whether you’re looking to reduce your payment, pay off debt, or access home equity, it all starts with knowing which refi option fits your goal.

Let’s break it down.

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🔁 What Is a Rate-and-Term Refinance?

This is the most common type of refinance — it simply replaces your current mortgage with a new one that has different terms.

You can:

• Lower your interest rate
• Change your loan term (e.g., 30 years to 15)
• Switch from FHA to Conventional (to drop mortgage insurance)
• Go from an adjustable rate to a fixed rate

🔍 There’s no cash taken out — just an improvement to your loan structure or monthly budget.

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💡 Best For:

✅ Reducing your monthly payment
✅ Paying off your loan faster
✅ Removing mortgage insurance
✅ Getting more predictable payments

💬 Think of it as a reset button — without tapping into your equity.

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💰 What Is a Cash-Out Refinance?

A cash-out refinance replaces your current mortgage with a new, larger one — and gives you the difference in cash at closing.

You keep your home, keep making payments — but now you’ve unlocked part of your home equity as usable money.

For example:

• Home is worth $500,000
• You owe $300,000
• New loan is $400,000
• You get $100,000 cash back (minus closing costs)

📘 You can use that money however you choose: debt payoff, home renovations, education, investments, etc.

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💡 Best For:

✅ Paying off high-interest debt
✅ Funding home upgrades
✅ Covering life events (college, medical, starting a business)
✅ Creating a financial buffer in uncertain times

💬 You’re leveraging the wealth you’ve built — without selling your home.

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🧮 Quick Comparison

Feature	Rate-and-Term	Cash-Out
Loan Amount	Same or smaller	Larger
Goal	Lower payment / change structure	Access equity
Equity Impact	Stays in the home	Partially withdrawn
Closing Costs	Usually lower	Slightly higher
Credit & Income Check	Required	Required
Best Fit	Budget reset	Financial flexibility

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🏢 Why PRMI?

At PRMI, we help you:

• Compare both options side by side
• Understand how your equity, credit, and goals shape the right decision
• Refinance in-house — no middlemen, no lender shopping

We’ll guide you toward the loan that fits your life, not just your payment.

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👇 Not Sure Which One Makes More Sense?

Let’s talk it through — we’ll help you explore your numbers and goals, and match you with the best-fit strategy.