Rate-and-Term vs Cash-Out Refinance
Keep the balance close, or pull equity out at closing.
You already own the property and you are replacing the loan, so the real question is how you size the new one. A rate-and-term refinance keeps the balance close to what you owe now and buys you a better rate, a longer term, or an exit from short-term debt. A cash-out refinance raises the balance above the payoff and returns the difference to you at closing, capital for your next deal. Because this is an investment property, the rent has to cover whichever payment you choose, so the real test is whether you have a funded use for the cash that beats the cost of carrying the bigger loan.
Rate-and-term is the cheaper move because you are not adding debt: take it for the rate, the term, or an exit from short-term money on schedule. Cash-out is worth the bigger payment only when the proceeds have a job waiting. USA Mortgage's DSCR loan states one leverage figure, up to 80% LTV, for either transaction, so the choice is about the payment you take on rather than the leverage you give up. Run the higher payment against actual rent before you decide how much to draw.
Rates and terms shown are typical figures, subject to underwriting and market conditions. Not a commitment to lend.
Common questions
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