Learn · loan programs
Refinancing (rate/term and cash-out)
Replace your current loan to change the rate, term or take cash out.
What it is
A rate/term refinance replaces your loan to change the interest rate or length without taking cash out. A cash-out refinance borrows more than you owe and pays you the difference.
Who it fits
- Owners who can lower their rate or payment
- Owners who want to remove mortgage insurance or switch from an adjustable rate
- Owners who need cash for repairs or a special assessment
How it works
- Fannie Mae cash-out refinances generally require the existing first mortgage to be at least 12 months old and a borrower on title for at least 6 months (with exceptions). Maximum loan-to-value is in Fannie Mae’s Eligibility Matrix.
- VA offers a cash-out refinance that can also refinance a non-VA loan into a VA-backed loan.
- Closing costs apply; compare them with what you save.
Benefits
- Possibly a lower rate or payment
- Access to equity in one loan
Tradeoffs
- Closing costs can add up to thousands of dollars
- Resetting the term can increase total interest
Typical documents
- Current mortgage statement
- Income documents
- Homeowner’s insurance declarations
Your lender may ask for more or less. Full list: 1-page document checklist (PDF).
Common myth: “Refinance only when rates drop a full point.” There’s no single rule; it depends on your costs, savings and how long you’ll stay.
Compare all three side by side: rate-and-term, cash-out and HELOC.
Check how a new payment changes your ratios with the DTI calculator.
Last checked October 17, 2026. Sources: Fannie Mae Selling Guide B2-1.3-03, cash-out refinances · VA, cash-out refinance loans
Availability depends on the lender and program funding; ask me which ones I can use for your loan.
Want to know what fits you?
Tell me a little about your situation and I’ll walk you through the options.