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The Curious Bag
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No cash-out refinances create a new mortgage. The new mortgage amount cannot exceed the sum of the closing costs, remaining balance on existing mortgages and any discount points, according to BrokerOutpost.com.
Limits
You can only receive 2 percent or $2,000 of the new loan in cash, according to BrokerOutpost.
Lower Rate
Signing a no cash-out refinance may lower your interest rate. This could save you money on your month-to-month payments.
Lower Term
No cash-out mortgages can lower your term, shortening the time paying off your mortgage would take. This could save you thousands, according to BrokerOutpost.
Adjustable Rate
A no cash-out mortgage could get you a new loan before your rate goes from fixed to variable, if your rate is fixed only temporarily. This could save you money when federal interest rates rise
Considerations
You can get a no cash-out refinance done on your first or second mortgage. Your rate or term may change, but your balance will remain the same.
Source:
BrokerOutpost.com: No Cash-Out Refinance
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