What is the difference between a rate-and-term and a cash-out refinance?
Both replace your current mortgage with a new one. A rate-and-term refinance, also called a no-cash-out refinance, changes the interest rate, the loan term, or the loan type while keeping the balance about the same. A cash-out refinance replaces your loan with a larger one and pays you the difference from your equity. Turn Times, a licensed mortgage broker (NMLS #2099552), compares both for California and Colorado homeowners.
Key facts
- A refinance pays off your current mortgage with a new loan, with new terms and new closing costs. (Freddie Mac: refinance options)
- Rate-and-term goals: change the rate, shorten or lengthen the term, move from an adjustable to a fixed loan, or remove a co-borrower, depending on lender rules. (Fannie Mae: refinance options)
- Cash-out goals: turn equity into cash for things like home improvements or paying down other debts. The new balance is larger, which can raise the payment and total interest.
- Lenders often allow a higher loan-to-value on rate-and-term than on cash-out refinances. (CFPB: loan-to-value ratio)
- Turn Times may charge an origination fee. All fees are disclosed on your Loan Estimate.
- Timelines vary by lender, property, appraisal, and underwriting.
Rate-and-term vs. cash-out at a glance
| Question | Rate-and-term refinance | Cash-out refinance | |---|---|---| | New loan balance | About the same as today, plus any financed costs | Larger than today | | Cash to you at closing | None, or a small amount allowed by lender rules | Yes, from your equity | | Typical goals | Change rate, term, or loan type | Use equity while replacing the first mortgage | | Equity after closing | About the same | Lower | | Guidelines | Often more flexible on loan-to-value | Often stricter on loan-to-value |
This is general education. Terms, available amounts, and eligibility are set by each lender.
When to compare a cash-out refinance with a HELOC
If your current first mortgage has terms you want to keep, a HELOC or home equity loan can add a second loan instead of replacing the first. If you want one loan and one payment, a cash-out refinance may be worth comparing. See HELOC vs. cash-out refinance and home equity options in California and Colorado.
How to compare refinance offers
- Get Loan Estimates for the same scenario from more than one lender and compare them line by line. (CFPB: Loan Estimate explainer)
- Look at total cost, not just the payment. A longer term can lower the payment but raise total interest.
- Estimate how long you'll keep the loan. Compare closing costs with the monthly change to see how long it takes to break even. Our guide on when to refinance walks through this.
- Review the Closing Disclosure before you sign. (CFPB: Closing Disclosure explainer)
- Know your right to cancel. For many refinances of a primary residence with a new lender, federal rules give a short right to cancel after closing. (CFPB: Regulation Z §1026.23)
Refinancing in our California and Colorado metros
We work with homeowners across California and Colorado, including Orange County, Los Angeles, San Diego, the Inland Empire, Sacramento, Denver, and Colorado Springs. Investors refinancing a rental can read DSCR purchase vs. DSCR cash-out refinance.
Common questions
Is a no-cash-out refinance the same as a rate-and-term refinance?
Yes. Both terms describe a refinance that changes the rate, term, or loan type without taking meaningful cash out of your equity.
Can I take any cash out in a rate-and-term refinance?
Some programs allow a small amount of cash back at closing, but the limits are set by the program and the lender. Larger amounts make it a cash-out refinance.
Does a cash-out refinance replace my current mortgage?
Yes. The new, larger loan pays off your current mortgage, and you receive the difference after costs.
How long does a refinance take?
Timelines vary by lender, property, appraisal, and underwriting.
Does Turn Times set refinance terms?
No. Turn Times is a licensed mortgage broker, not a lender. The lender you choose issues the Loan Estimate, underwrites, approves, and funds the loan.
Next step
Thinking about refinancing a California or Colorado home? Schedule a Loan Options Consultation at /schedule or call 844-999-8876. A consultation is a no-obligation educational conversation, not a credit decision.
Sources
- Freddie Mac: Understanding your refinance options
- Fannie Mae: Mortgage refinancing options
- CFPB: Loan Estimate explainer and Closing Disclosure explainer
- CFPB: Loan-to-value ratio
- CFPB: Regulation Z §1026.23, right of rescission
Just Homes Inc. dba Turn Times · NMLS #2099552 · CA DFPI Financing Law License #60DBO-181268 · CO Mortgage Company Registration #2099552 · Equal Housing Opportunity Loans made or arranged pursuant to a California Financing Law license. Verify licenses at NMLS Consumer Access (nmlsconsumeraccess.org).