Finance
What is 'cash-out refinance' versus 'rate-and-term refinance' in Nevada?
AThey are the same type of refinance transaction
BA rate-and-term refinance replaces the existing loan with a new loan at a different rate or term without extracting equity; a cash-out refinance allows the borrower to take equity out as cash, creating a larger loan than the payoff of the existing mortgage✓ Correct
CCash-out refinancing is prohibited in Nevada for primary residences
DRate-and-term refinances are only for commercial properties in Nevada
Explanation
A rate-and-term refinance simply replaces the existing mortgage with a new loan at a better rate or different term — no cash is taken out. A cash-out refinance creates a new loan larger than the existing payoff, with the difference paid to the borrower as cash. In Nevada, cash-out refinances have been popular for funding home improvements, paying off higher-rate debt, or investing in additional properties. Lenders typically allow lower LTVs on cash-out refinances (e.g., max 80% LTV vs. 95% for rate-and-term).
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