Mortgage Guide

Refinancing

Rate-and-Term vs Cash-Out Refinance

Published by the Mortgage Guide editorial team. Rate assumptions and content updated October 2026. This page is educational. It is not a loan offer, approval, or personalized financial advice.

Why lenders treat them differently

A larger loan is a larger risk. Pricing, loan-to-value caps, and mortgage insurance can be stricter on cash-out. This site does not have a separate rate sheet for that difference.

Use the same quoted rate only when the quote was actually for that loan type. Do not paste a rate-and-term quote into a cash-out test and call it comparable.

How to model each one here

Rate-and-term matches the refinance calculator: balance plus the closing costs you enter.

For cash-out, add the cash you would take to the current balance, then run the refinance calculator. Say so when you compare the two results.

Which balance to type
GoalBalance to enter
Lower rate or new termCurrent payoff
Cash in handPayoff plus cash you want

Calculators

Related guides

Sources

Common questions

Do closing costs make a rate-and-term loan into cash-out?

Not in ordinary speech. Financing the costs increases the balance slightly. Cash-out means receiving additional money.

Which one has the lower payment?

Usually the smaller balance, if the rate and term match. Cash out works against that.