A purchase loan is used to finance the purchase of a home, while a refinance loan replaces an existing mortgage on a property you already own.
Purchase Loan
A purchase mortgage is obtained when buying a home. The loan helps finance the home’s purchase price, and borrowers typically provide a down payment at closing. Loan terms, including the interest rate, loan term, and structure, are established as part of the home purchase transaction.
Refinance Loan
A refinance replaces your current mortgage with a new loan. Homeowners may refinance to:
- Adjust their interest rate
- Change the loan term (for example, from 30 years to 15 years)
- Switch from an adjustable-rate loan to a fixed-rate loan
- Access home equity through a cash-out refinance
In a refinance, you are not purchasing a new property — you are restructuring the financing on a home you already own.
The right option depends on your financial goals and situation. A licensed Mortgage Loan Officer can review your scenario and explain available options based on current market conditions.