The Difference Is What the New Loan Is Doing
A DSCR cash-out refinance replaces the existing investment-property debt with a larger loan and returns eligible equity to the borrower after payoffs and closing costs. A rate-and-term refinance primarily replaces the existing debt without structuring the transaction around significant cash proceeds. Both can qualify on the rental property rather than W-2 or personal tax-return income, but the leverage and seasoning treatment can differ by program.
Simple way to think about it:
If the goal is to pull usable equity out of the property, compare cash-out options. If the goal is mainly to replace expensive or short-term debt, lower the payment, or change the loan structure, rate-and-term may be the cleaner fit.
When Cash-Out Usually Makes More Sense
- You want equity for the next acquisition or renovation.
- You completed a rehab and want to recycle capital from the new value.
- You need proceeds beyond the amount required to pay off the existing loan.
- You want to consolidate investment-property debt and still receive cash at closing.
Get Brick Capital has multiple cash-out paths. Program 3 can use a completed-renovation ARV immediately on qualifying files. Program 1 can use the new ARV after at least 91 days and can close loans as low as $50,000. Low-FICO cash-out options are also available at reduced leverage. Those features belong to different capital-partner programs and should not be assumed to stack together in one loan.
When Rate-and-Term Usually Makes More Sense
- You are exiting a bridge or hard-money loan into permanent rental financing.
- You want a different rate, amortization, or payment structure without maximizing proceeds.
- You need to refinance maturing debt but do not need meaningful cash back.
- A lower loan amount produces a better DSCR or pricing outcome.
A rate-and-term structure can be especially useful when the current loan is expensive or nearing maturity. The capital partner still evaluates credit, leverage, property type, rent, reserves, and the applicable seasoning rules.
How the 90-Day Value Rule Affects Both Structures
If a refinance is being completed before 90 days of ownership under a program that requires seasoning to use the new value, leverage is based on the original purchase or value basis. Once the program's seasoning requirement is met, the current or new ARV can be used subject to that program's rules. Completed-renovation Program 3 is the important exception because it can use the new ARV immediately after the rehab is complete.
That means the best structure cannot always be determined by looking only at the requested loan amount. Purchase date, renovation status, payoff, current value, and intended cash proceeds all matter.
Compare Cash-Out and Rate-and-Term Side by Side
Send the property value, current payoff, rent, purchase date, renovation status, FICO range, and how much cash you want back.
Get a Quote →What to Compare Beyond the Loan Amount
When both structures are available, compare the entire transaction rather than just the note rate:
- Loan amount and actual cash received at closing
- Interest rate and any points or buydown
- Prepayment penalty structure
- Monthly principal and interest payment
- DSCR at the proposed payment
- Required reserves and closing liquidity
- Seasoning and value-basis treatment
Start with the cash-out refinance hub if equity is the main goal, or the rate-and-term refinance page if replacing existing debt is the priority.