No Cash Out Refinance vs. Limited Cash Out Refinance: What You Need to Know Before Getting Started

Abstract

There's no cash out, limited cash out, and even cash out refinances. What is a no cash out refinance? A no cash out refinance is often referred to as a "Rate-and-term" refinance. Typically, no cash out refinances are a good option if you can qualify for a better interest rate than when you first took out your mortgage, perhaps due to a better credit score. As the name suggests, a limited cash out refinance also allows you to take out a limited amount of money, up to $2,000. Because a limited cash out refinance is similar to a no cash out refinance, their qualifying requirements are alike, as well. Here's what you need to know before apply for limited cash out refinance: Credit score: At least 620 Debt-to-income ratio: Up to 43% Loan-to-value ratio: Less than 97% Waiting period: 12 months, and you must show that you've never missed a payment within those 12 months Maximum cash out: $2,000 No cash out refinance vs. limited cash out refinance: How do they compare? The key difference between the two loan types is whether you take cash out after closing. Why refinance with Better Mortgage Whether you choose a no cash out or a limited cash out refinance, saving on your closing costs will help you avoid extra expenses, whether they're out-of-pocket or throughout the life of your loan.