Is cash out refinance and refinance the same ?

[Melonie Wong]

One of my rental properties has some equity on it, I am thinking to do refinance and take out the extra equity, is it call cash out refinance ? Is cash out refinance interest rate will be higher than refinance ?

[Alex Bekeza]

@Melonie Wong

What you are describing is indeed called a Cash Out Refinance.  Depending on the terms of your current mortgage a cash out refinance does not necessarily mean you will have a higher interest rate than your current loan and it also does not mean the rate would necessarily be higher than a simple rate/term refinance.  Typically, a cash out refinance may be subject to a slight Loan to Value % decrease.

As an example. A bank may offer 80% LTV rate/term refinances but reduce cash out refinances to 70-75%.

Feel free to reach out anytime.  

All the best,