RATE AND TERM REFINANCE
Change the rate or the term. Leave the balance alone.
A rate and term refinance replaces your mortgage with a better one and takes no cash out. Here is the arithmetic that tells you whether it is worth doing, including the case where it is not.
Definitions
Two different transactions people call the same thing
The difference decides your rate, your closing costs and how much scrutiny the file gets.
Rate and term refinance
The new loan pays off the old balance plus closing costs, and that is all. You walk away with a different rate, a different term, or both, and no money in hand. This is the version priced at our standard mortgage rates.
Cash-out refinance
The new loan is larger than the old one and the difference comes to you at closing. It carries a higher rate, tighter equity limits, and a longer look at what the money is for. If that is what you need, a line of credit is often cheaper.
Worked example
The break-even math, on real numbers
Two years ago you borrowed $330,000 on a 30-year fixed at 7.25%. Your principal and interest payment is $2,251.18. After twenty-four payments the balance is $323,373. Rates are now 6.375%, and Summit quotes you $4,100 in total closing costs on the refinance.
Break-even is one division problem: closing costs divided by monthly savings. Take a new 30-year and the payment drops to $2,017.43, a saving of $233.75 a month. Divide $4,100 by $233.75 and you get 17.5, so you are ahead after eighteen payments. If you are confident you will still own the house in a year and a half, that refinance pays for itself.
Now the part most calculators hide. That new 30-year restarts the clock, so you go from 28 years left to 30. You save on the monthly payment and still pay more months. Match the remaining term instead, taking a 28-year, and the payment is $2,066.27, a saving of $184.91 and a break-even of 23 months. The remaining interest falls from $433,024 to $370,895, which is $62,129 you keep. The 30-year saves more per month and $32,000 less over the loan.
Option
Monthly P and I
Monthly change
Interest still to pay
Keep the current loan at 7.25%
$2,251.18
None
$433,024
New 30-year at 6.375%
$2,017.43
$233.75 less
$402,900
New 28-year at 6.375%
$2,066.27
$184.91 less
$370,895
New 20-year at 6.375%
$2,387.24
$136.06 more
$249,565
Figures assume $323,373 refinanced at 6.375% with $4,100 in closing costs paid at settlement, and cover principal and interest only. Rates current as of July 2026 and subject to change. Membership eligibility required. Equal Housing Opportunity Lender. This is a demonstration website; rates, products, and figures shown are illustrative only.
Do it yourself
Three steps to your own break-even
You can do this on a napkin before you talk to anyone, including us.
Get your real closing costs
Ask any lender for a Loan Estimate, which they are required to give you. Add up the lender fees, title, recording and appraisal. That total is the numerator.
Compare payments at the same term
Line up the new payment against your current one using the years you have left, not a fresh thirty. The difference is the denominator.
Divide, then be honest about the date
Costs divided by monthly savings gives you the month you break even. Then ask yourself how likely it is you still own this house then. If the answer is shaky, do not refinance.
Be careful
When a refinance does not make sense
We will tell you this in person too, even though it costs us a loan.
You are moving soon
If you might sell or relocate before the break-even month, the closing costs are money burned. A two-year break-even and a possible job change next spring do not go together.
You are 22 years in
Late in a mortgage most of every payment is already principal. Restarting a 30-year loan at that point lowers the payment and quietly costs you tens of thousands in interest.
The gap is under half a point
A quarter point rarely covers the cost of closing. Wait for a real move in rates rather than paying $4,000 to save $60 a month, unless you are also shortening the term on purpose.
Common questions
Can I roll the closing costs into the loan?
Yes, as long as the new balance stays within our loan-to-value limits. It still counts as rate and term. Just remember you are financing those costs for the life of the loan, which stretches out the true break-even.
Do I need a new appraisal?
Often not. Many rate and term refinances qualify for an automated valuation, which costs nothing and saves about two weeks. We will know within a day of application.
Will this drop my mortgage insurance?
It can. If your home has appreciated enough that the new loan lands at or under 80% of value, the mortgage insurance goes away, and that saving belongs in your break-even math.
How long does it take?
Most refinances close in three to four weeks. There is also a federally required three-day right of rescission after signing on a primary residence, so funds do not disburse until the fourth business day.
What if I want cash out after all?
Then we price it as a cash-out refinance, or we look at a home equity line of credit at 6.625% APR instead. For most members who need $40,000 or less, the line of credit costs less to open.
We will do the math with you
Bring your current statement and we will show you the break-even in about fifteen minutes, including the version where you stay put.