There are different types of refinances. The two most common are: Rate-and-term refinances:Your mortgage rate is the percentage you pay in interest on your loan. Your mortgage term is the length of time you must make payments on your loan. As the name suggests, a rate-and-term refinance changes the rate and term of your mortgage loan. For example, you can refinance a 15-year mortgage to a 30-year term. When you refinance your rate or term, your monthly payment changes without changing your principal balance. Cash-out refinance:A cash-out refinance allows you to accept a higher loan balance in exchange for taking cash out of your home equity. For example, let’s say you have a $100,000 principal balance on your loan and you want to pay off $20,000 worth of credit card debt. A cash-out refinance would allow you to take out a loan worth $120,000 and your lender would give you $20,000 in cash. Ask your lender about the types of refinances they offer. Then ask about the benefits and drawbacks of each.