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A cash-out refinance differs from a rate-and-term refinance because:

Loan Origination Activities · 27% of the SAFE exammedium

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Correct answer: The borrower receives cash from their home equity beyond payoff of existing liens

In a cash-out refinance, the new loan amount exceeds the payoff of the existing mortgage, and the borrower receives the difference in cash. Rate-and-term refinances only change the rate and/or term without extracting equity.

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