A rate-and-term refinance alters an existing mortgage's interest rate or without advancing new money. You simply replace your original mortgage with a new one with different terms. If your credit has improved substantially, you may be able to refinance at a lower interest rate. Conventional and USDA mortgages are eligible for rate and term refinancing. The requirements will depend on which type of mortgage you have, but typically you'll need a certain credit score, debt-to-income ratio, and amount of equity in your home.