A rate-and-term refinance replaces your existing mortgage with a new one that has a better rate, a different term, or both — but you don't take any cash out. You may roll closing costs into the loan, but the net cash to you is zero.
Common reasons to do a rate-and-term refi: rates dropped significantly, you want to switch from an ARM to a fixed-rate, or you want to drop a 30-year into a 15-year for faster payoff. Pricing is usually better than a cash-out refinance because the lender takes less risk.
Calculate your break-even point before refinancing: divide the total closing costs by the monthly payment savings. If you'll keep the home longer than the break-even, the refi is worth it.