Rate-and-term refinance

A refinance always replaces the old loan. Rate-and-term means the point of the event is the rate or the schedule, not a large cash withdrawal. A cash-out refinance increases the unpaid principal so the borrower can take cash. Both are refinances. They are underwritten and reported differently.

CFPB defines mortgage refinance as taking a new loan to pay off and replace the old one and lists lower rate or payment among common reasons. Rate-and-term is that replacement without the cash-out feature Fannie Mae defines separately.

HMDA and consumer conversations split these refinance types. One page cannot carry both meanings.

Sam refinances only to change the rate and keep a similar unpaid principal. No substantial cash is taken at closing. That is rate-and-term, not cash-out.

• Cash-out refinance