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Lower Your Rate No Cash Out • Conv • FHA • VA • USDA

Rate & Term Refinance
in Michigan.

The most common refinance for a reason. Lower your rate. Shorten your term. Remove FHA mortgage insurance. Restructure a loan that no longer fits your life. No cash out -- just a better mortgage than the one you have now. The math either works or it does not. We will tell you honestly before you spend a dime.

Run My Refi Numbers Talk to Kirby or Angie
Quick Answer

A rate and term refinance replaces your existing mortgage with a new one -- different rate, different term, or both -- without taking cash out. The goal is to reduce your monthly payment, pay off your loan faster, or remove mortgage insurance. Whether it makes financial sense depends entirely on the break-even point: the month your monthly savings exceed your closing costs. We calculate that before you commit to anything.

No
Cash Taken Out
620+
Min Credit Score
2-3%
Typical Closing Costs
20-30
Days to Close
Break-
Even Is the Key Number

What a Rate and Term Refinance
Actually Does

A rate and term refinance is the cleanest version of a refinance. You are not pulling cash out, you are not consolidating debt into the mortgage, you are not fundamentally changing your financial situation. You are replacing your existing loan with a better one -- lower rate, shorter term, or both -- and paying closing costs to do it.

The most important number in any rate and term refinance is the break-even point. Closing costs on a refinance typically run 2-3% of the loan amount -- on a $200,000 loan that is $4,000 to $6,000. Your monthly savings from the lower rate need to exceed that cost to justify the transaction. Divide closing costs by monthly savings and you have your break-even in months. If you plan to stay in the home past that point, the refinance makes sense. If not, it may not.

We run this calculation before we ever recommend moving forward. There are situations where a refinance makes clear, obvious financial sense and situations where the math is murkier. We tell you which one you are in.

The Four Main Reasons Michigan Homeowners
Do a Rate and Term Refinance

  • Rate dropped enough to justify closing costs -- break-even within a reasonable timeframe
  • Removing FHA mortgage insurance by refinancing into conventional with 20%+ equity
  • Shortening from 30 to 15 years to build equity faster and reduce total interest paid
  • Converting from an adjustable-rate mortgage to a fixed rate for long-term payment certainty

FHA to Conventional -- The MIP Removal Refinance

This is one of the most financially impactful refinances Michigan homeowners can make and it does not always require a lower rate to make sense. FHA mortgage insurance -- MIP -- stays for the life of the loan when you put less than 10% down. It does not cancel at 20% equity the way conventional PMI does.

Once you have 20% equity based on a new appraisal, refinancing into a conventional loan eliminates that monthly MIP charge entirely. Depending on your loan balance and MIP rate, this can save $150 to $350 or more per month. Even at a rate equal to your current FHA rate, removing MIP can produce a break-even within 12 to 18 months on many loans.

If you took an FHA loan in the last 3 to 5 years and your home has appreciated, this conversation is worth having. Northern Michigan home values have moved meaningfully in many markets -- your equity position may be better than you think.

Rate & Term At a Glance

Cash OutNone
Min Credit Score620 (conventional)
Closing Costs2-3% of loan
Seasoning Required6 months typical
ProgramsConv, FHA, VA, USDA
Appraisal RequiredUsually yes
Rescission Period3 days (primary)

Does a Refi Make Sense Right Now?

Tell us your current rate, loan balance, and remaining term. We will calculate your break-even point and tell you honestly whether the math works.

Run My Numbers Free Consultation

The Break-Even Calculation --
The Only Number That Matters

A real example of how to evaluate whether a refinance pencils out.

Break-Even Example

Michigan primary residence rate and term refinance -- illustrative only

Current Rate7.25%
New Rate6.50%
Loan Balance$240,000
Current Monthly P&I$1,638
New Monthly P&I$1,517
Monthly Savings$121
Estimated Closing Costs$5,500
Break-Even Point
Stay past month 45 and this refinance pays off
45 Months

Illustrative example only. Actual rates, payments, and closing costs vary. Not a loan commitment. Payment example does not include taxes, insurance, or mortgage insurance.

Four Reasons to Refinance --
Which One Is Yours?

📉

Lower Your Rate

Rates have dropped since you bought or last refinanced. The question is whether the drop is large enough and your remaining loan life is long enough to justify closing costs. We calculate the break-even and let the math decide.

🚫

Remove FHA Mortgage Insurance

FHA MIP does not cancel automatically. Once you have 20% equity based on a new appraisal, refinancing into conventional eliminates it permanently. Often makes sense even without a significant rate improvement.

⏩

Shorten Your Term

Refinancing from 30 to 15 years increases your monthly payment but dramatically reduces total interest paid. Ideal for homeowners who want to own free and clear sooner and can absorb the higher payment.

🔒

Convert ARM to Fixed

If your adjustment date is approaching and you want payment certainty, converting to a fixed rate locks your payment for the remaining life of the loan. Covered in more detail on the ARM to Fixed page.

15-Year vs. 30-Year Refinance --
What the Choice Actually Means

The two most common term structures. Each has a very different financial profile.

15-Year Fixed

Builds Equity Faster
  • Higher monthly payment than 30-year
  • Lower interest rate than 30-year
  • Dramatically less total interest paid
  • Equity builds much faster
  • Paid off in half the time
  • Best for: stable income, long-term stay, wealth building

30-Year Fixed

Lower Monthly Payment
  • Lower monthly payment than 15-year
  • Higher interest rate than 15-year
  • More total interest paid over life of loan
  • More cash flow flexibility month to month
  • Option to pay extra principal voluntarily
  • Best for: cash flow priority, uncertain timeline

How a Rate & Term Refinance Works

From first calculation to lower payment.

1

Calculate Break-Even First

Before anything else, we calculate your break-even point. Current rate, new rate, loan balance, estimated closing costs, monthly savings -- we run all of it and give you a clear number. If the math works, we move forward. If it does not, we tell you.

2

Application and Documentation

Income verification, credit pull, current mortgage statement. Standard documentation -- similar to a purchase loan but typically faster because you already own the property.

3

Appraisal

Most rate and term refinances require an appraisal to confirm current value. If you are refinancing to remove FHA MIP, the appraisal is especially important -- it establishes whether your equity position actually supports the switch to conventional. Some VA and FHA streamline options may not require a full appraisal.

4

Underwriting and Approval

Your file goes through underwriting. We manage any conditions and keep you updated. Most rate and term refinances move through underwriting in 1 to 2 weeks.

5

Close, Rescission, and New Payment

You sign at closing. On a primary residence, the 3-day rescission period follows. Then the loan funds, your old mortgage is paid off, and your new -- lower -- payment begins the following month.

Frequently Asked Questions

Closing costs on a rate and term refinance typically run 2-3% of the loan amount. On a $200,000 loan that is roughly $4,000 to $6,000. These can be paid out of pocket, rolled into the new loan balance, or offset by accepting a slightly higher rate in exchange for lender credits. We provide a Loan Estimate with exact line-item costs before you commit to anything -- no surprises at the closing table.
There is no universal answer -- it depends on your loan balance, closing costs, how long you plan to stay, and your break-even point. The old rule of thumb was "1% drop to make it worth it" but that oversimplifies. On a $400,000 loan a 0.5% rate drop produces significant monthly savings with a reasonable break-even. On a $100,000 loan the same rate drop saves less each month and takes longer to recover costs. We run the actual numbers for your specific file rather than applying a generic threshold.
Yes -- this is one of the most common and financially impactful refinances Michigan homeowners make. Once you have 20% equity based on an appraisal, refinancing into conventional eliminates FHA mortgage insurance permanently. Depending on your MIP rate and loan balance, this can save $150 to $350+ per month. Even at a rate equal to your current FHA rate, removing MIP often produces a break-even within 12 to 24 months. If you have an FHA loan and your home has appreciated, this conversation is worth having.
Most conventional rate and term refinances require a minimum 6-month seasoning period from your original closing date. FHA and VA streamline refinances have their own requirements -- typically 6 to 12 months of on-time payments. If you bought recently, you typically need to wait before refinancing. The exception is if you are switching loan types entirely and not doing a streamline -- conventional guidelines apply regardless of the original loan type in most cases.
Rolling closing costs into the loan means a slightly larger balance and marginally higher payment -- but no out-of-pocket expense at closing. Paying out of pocket preserves your loan balance and produces a slightly lower payment. If you plan to stay long-term, paying out of pocket typically costs less over time. If you want to preserve cash, rolling them in makes sense. A third option is lender credits -- accepting a slightly higher rate in exchange for the lender covering your closing costs. We run all three scenarios so you can compare.

Wondering If a Refinance Makes Sense Right Now?

Tell us your current rate, loan balance, and how long you plan to stay. We will run the break-even honestly and tell you exactly where you stand -- including if the answer is not yet.

Run My Refi Numbers Free Consultation

Kirby and Angie Mortgage Loan Team | Union Home Mortgage | NMLS #2229229 | Angie Anderson NMLS #1999286 | Kirby Slocum NMLS #680817 | Licensed in Michigan, Ohio, and Indiana | Equal Housing Lender. All refinance transactions subject to credit approval, appraisal, underwriting review, and program eligibility. Refinancing an existing mortgage may result in higher total finance charges over the life of the loan. Break-even calculations and payment examples are estimates only and do not constitute a loan commitment. Information provided is for educational purposes only.