Difference between a refinance and a cash-out refinance?

[Matt Wells]

Is there a difference between a refinance and a cash-out refinance or is it the same thing? I am confused here. Are all refinances actually cash-out refinances? Are the terms synonymous? Can someone please explain this to me and provide an example? 

[Andy Webb]

@Matt Wells - it's like saying an elephant is a mammal, but a mammal is not necessarily an elephant.

A cash-out refinance is a type of refinance, but you can have other types, most notably rate-and-term refis.  In the latter case you are changing the terms of the loan, but not necessarily pulling out cash. In a lot of cases you can't pull out much cash (we can usually pull up to $2k out).

You posted this in the BRRRR section, and commonly with that strategy we are buying a property with a high-interest, short-term hard-money or private money loan (think construction or bridge loan), then once the renovations are done, doing a rate-and-term refi to roll into a different loan with a lower rate and longer term. E.g. going from hard money with a 12 month term and 12% interest, into a long-term Fannie Mae backed loan with a 30-year term and a great fixed rate of 2.75%.

Andy