Rate-and-Term vs. Cash-Out Refinance: What’s the Difference?

Refinancing your mortgage isn’t one-size-fits-all. The two most common options are rate-and-term and cash-out refinancing—and each serves a different purpose. 

Rate-and-Term Refinance 

This type of refinance lets you: 

• Lower your interest rate 

• Change your loan term (15-year or 30-year) 

• Switch from an adjustable-rate to a fixed-rate mortgage 

Why choose this? To reduce your monthly payment or pay off your home faster. 

Cash-Out Refinance 

This option lets you: 

• Refinance for more than what you currently owe 

• Receive the difference as cash back 

• Use your home equity to fund renovations, pay off debt, or invest 

Why choose this? To access the equity in your home for other financial goals. 

Key Differences 

Feature	Rate-and-Term	Cash-Out
Increases Loan?	No	Yes
Cash to Borrower?	No	Yes
Closing Costs?	Lower	Slightly higher
Appraisal Needed?	Sometimes	Almost always

Which One Is Right for You? 

A rate-and-term refi is ideal if your goal is saving money over time. A cash-out refi is best if you need access to your equity now. Either way, the closing process is similar—and Title Stream is here to guide you through both.