No Cash-Out Refinance

AAA

DEFINITION of 'No Cash-Out Refinance'

The refinancing of an existing mortgage for an amount equal to or less than the existing outstanding loan balance plus an additional loan settlement cost. It is done primarily to lower the interest rate charge on the loan and/or to change the term of the mortgage.

A no cash-out refinance is also known as a 'rate and term refinance'.

INVESTOPEDIA EXPLAINS 'No Cash-Out Refinance'

Most borrowers do not realize that refinancing an existing mortgage into a new mortgage with a lower interest rate might actually mean more interest will be paid over the life of the mortgage. This is especially true if the new mortgage has a term longer than what is left on the existing mortgage, but it is dependent upon the amount by which the interest rate is lowered, and any additional outstanding years on the new loan over the old loan.

Also, most refinancing transactions involve additional direct costs, which most borrowers roll into the balance of the new mortgage, making you pay even more. The bottom line is that there is more to be considered in refinancing a mortgage than simply lowering your monthly payment by a few dollars.

RELATED TERMS
  1. Refi Bubble

    A period during which old debt obligations are being replaced ...
  2. Rate And Term Refinance

    The refinancing of an existing mortgage for the purpose of changing ...
  3. Refinance

    1. When a business or person revises a payment schedule for repaying ...
  4. Mortgage Originator

    An institution or individual that works with a borrower to complete ...
  5. Refinance Wave

    A situation where a large amount of mortgage refinancing occurs ...
  6. Cash-Out Refinance

    A mortgage refinancing transaction in which the new mortgage ...
Related Articles
  1. Credit & Loans

    How Mortgage Refinancing Affects Your Net Worth

    Find out how to determine whether refinancing will put you ahead or even more behind.
  2. Options & Futures

    Make A Risk-Based Mortgage Decision

    Find out how to choose which mortgage style is right for you.
  3. Home & Auto

    When (And When Not) To Refinance Your Mortgage

    There are both good and bad reasons to refinance. Learn more about both here.
  4. Stock Analysis

    How Chimera Investment Bear The Brunt Of REITst?

    Following the financial crisis, REITs that specialized in investing in mortgage-backed securities produced huge gains for their shareholders.
  5. Credit & Loans

    Reverse Mortgages: How To Find A Good One

    Finding a reverse mortgage generally means using a lender that specializes in them. Here's how to find a reputable one.
  6. Stock Analysis

    How Are Interest Rates Affecting Annaly Cap Mgmt?

    Annaly Capital Management reported a net loss of $658 million thanks to the mortgage REIT's strategy of hedging its exposure to higher interest rates.
  7. Savings

    Mortgage Faceoff: Bank of America Vs. Wells Fargo

    Which bank offers the better mortgage deal? Here's how they compare on two popular types of mortgage.
  8. Credit & Loans

    How To Become a Mortgage-Backed Securities Analyst

    Specializing in structured or derivative credit products like mortgage-backed securities requires education and prior experience in the mortgage field.
  9. Investing

    3 Major Risks For Annaly’s Investors

    Thanks to its double-digit dividend yield, Annaly Capital Management has long been a favorite among income-seeking investors.
  10. Investing

    Ready To Invest In Financial Leverage Funds?

    Whenever you invest in a leveraged financial fund or are thinking about doing so, it's important to know the risks that could weigh on its returns.

You May Also Like

Hot Definitions
  1. Efficiency Ratio

    Ratios that are typically used to analyze how well a company uses its assets and liabilities internally. Efficiency Ratios ...
  2. Fixed Cost

    A cost that does not change with an increase or decrease in the amount of goods or services produced. Fixed costs are expenses ...
  3. Subsidy

    A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy ...
  4. Sunk Cost

    A cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business ...
  5. Technical Skills

    1. The knowledge and abilities needed to accomplish mathematical, engineering, scientific or computer-related duties, as ...
  6. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
Trading Center