Can I get cash back on a rate-and-term refinance?

A small, capped amount, varies by lender. Anything beyond that incidental figure is treated and priced as cash-out.

Does cash-out always cost more?

It costs more in leverage (75% vs 80%) and typically in rate (a pricing add). Whether it costs more overall depends on what the cash is used for.

Can I do a rate-and-term refinance with no seasoning?

There is generally no seasoning requirement to lower your rate or change structure, unlike cash-out, which follows seasoning rules on cost basis versus appraised value.

Does refinancing reset my prepayment penalty?

Yes. The new note carries whatever prepayment option you select at that closing, independent of what the old note had.

Which one should I run the numbers on first?

Whichever matches your actual goal — a lower rate or better terms points to rate-and-term, a need for capital points to cash-out. Running both is free and worth doing.

LESSON 1 OF 65 MIN READ

Rate-and-term or cash-out: which refinance do you actually need?

A rate-and-term refinance replaces your existing loan with a new one on the same property to improve the rate, the structure, or the prepayment terms, and it caps at 80% loan-to-value on Silt's sheet. A cash-out refinance does the same thing but sizes the new loan larger than the payoff so you can extract equity, and it caps at 75% LTV with a 37.5 basis point pricing add relative to the purchase grid. The two are not interchangeable: rate-and-term is a cost decision, cash-out is a capital decision, and mixing the two goals in your head is the most common way to over-leverage a property.

THE NUMBERS

Minimum DSCR	0.75 (0.75–0.99 prices at +62.5 bps, 70% LTV cap)
Maximum LTV	80% purchase or rate-and-term · 75% cash-out
FICO floor	660 (below that the desk does not lend)
Loan size	$100K – $3M single · $10M portfolio
Reserves	6 months PITIA · 12 months on a portfolio
Prepay options	5-4-3-2-1 par · 3-2-1 +25 bps · 1-yr +50 bps · none +87.5 bps
Typical days to close	21–30 days from a signed term sheet
Rate sheet	Silt Rate Desk — Market Composite Sept 2026 · effective 2026-09-01

ILLUSTRATIVE — published program floors, not a quote or a commitment to lend. Subject to underwriting, appraisal and final credit approval.

What actually qualifies as rate-and-term?

A rate-and-term refinance pays off the existing mortgage, covers closing costs and, on most sheets, a small amount of cash back — often capped near 1-2% of the loan amount or a flat dollar figure, with anything above that reclassified as cash-out. It is the refinance you run when the goal is a lower rate, a shorter prepayment term, a switch from interest-only to amortising, or simply removing a co-borrower. No equity leaves the deal beyond that incidental amount, which is why the leverage ceiling sits at the same 80% used on a purchase.

What actually qualifies as cash-out?

Any refinance that returns meaningfully more cash to you than the payoff and costs require is cash-out, regardless of what you plan to do with the money. The desk does not ask permission for the use of proceeds beyond confirming it is business-purpose, but it does price the transaction differently: 75% maximum LTV instead of 80%, and a rate add over the purchase grid. That five-point leverage gap and the pricing add exist because a lender giving you money is a larger risk than a lender simply re-papering an existing loan.

How much does the 80/75 split actually cost you?

On a $400,000 property, 80% LTV is a $320,000 loan; 75% LTV is $300,000 — a $20,000 difference in proceeds for the same house. Layer in the cash-out rate add and the gap widens further in monthly payment terms even before you touch the extra $20,000. That is the real price of pulling equity rather than simply re-terming: less leverage, a higher rate, and a fresh prepayment clock, all three at once.

When does rate-and-term make sense on its own?

When your current note carries a prepayment penalty that has burned off or is about to, when rates have moved enough to justify the closing costs, or when you want to convert an interest-only loan to amortising before the IO period ends and the payment steps up. It also makes sense simply to consolidate a short-term bridge loan onto permanent thirty-year paper without pulling any cash, which some investors do even when equity is available, precisely to keep the 80% ceiling and avoid the cash-out add.

When is cash-out the right call instead?

When the reason for refinancing is capital — a down payment on the next property, a renovation on this one, or paying off higher-cost debt — cash-out is the only route that gets you there, because a rate-and-term refinance by definition does not release funds beyond incidental amounts. The trade-off is intentional: you are borrowing against equity you have already earned, so the desk prices and limits that borrowing more conservatively than a simple re-term.

Can you run the numbers both ways before deciding?

Yes, and you should. Price the rate-and-term scenario at 80% LTV against the cash-out scenario at 75% LTV side by side, including the rate add and any prepayment penalty owed on your existing note, before committing to either. Sometimes the cheaper path to capital is not touching this property at all — a HELOC or a second lien from another source, evaluated with your CPA, can outperform a full cash-out refinance depending on rate and cost basis.

Same $400,000 rental, two refinance goals

Existing loan payoff	$260,000
Rate-and-term max — 80% of $400,000	$320,000 loan · ~$55K available above payoff/costs, but only incidental cash back allowed
Cash-out max — 75% of $400,000	$300,000 loan · roughly $30,000 net after payoff and costs
Cash-out pricing add	+0.375% over the purchase grid
Illustrative rate-and-term rate, FICO 740	6.75%
Illustrative cash-out rate, same FICO/LTV band	7.125%
Prepayment penalty	Depends on the option chosen on the new note
Result	Two different loans for two different goals — price both

Illustrative figures from the current sheet, not a quote or commitment to lend. Actual proceeds depend on appraised value, payoff amount and closing costs.

WHAT WE NEED FROM YOU

Current mortgage statement. Shows the payoff balance and confirms no delinquency.
Payoff statement. Ordered from the current servicer, valid through the closing date.
Lease or rent evidence. Same requirement as a purchase — the lower of in-place or market rent.
Entity documents. Especially if the property is being moved into an LLC as part of the refinance.
Insurance binder. Naming the entity and the new lender as mortgagee.

FREQUENT QUESTIONS

Can I get cash back on a rate-and-term refinance?: A small, capped amount, varies by lender. Anything beyond that incidental figure is treated and priced as cash-out.
Does cash-out always cost more?: It costs more in leverage (75% vs 80%) and typically in rate (a pricing add). Whether it costs more overall depends on what the cash is used for.
Can I do a rate-and-term refinance with no seasoning?: There is generally no seasoning requirement to lower your rate or change structure, unlike cash-out, which follows seasoning rules on cost basis versus appraised value.
Does refinancing reset my prepayment penalty?: Yes. The new note carries whatever prepayment option you select at that closing, independent of what the old note had.
Which one should I run the numbers on first?: Whichever matches your actual goal — a lower rate or better terms points to rate-and-term, a need for capital points to cash-out. Running both is free and worth doing.

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