General Mortgage Knowledge · 20% of the SAFE exameasy
Correct answer: A refinance where the new loan exceeds the payoff and the excess is paid to the borrower in cash
In a cash-out refinance, the new loan is larger than needed to pay off the old loan, and the excess is paid to the borrower in cash. Cash-out refis typically have stricter approval requirements and higher rates than rate-and-term refis.
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