limited cash-out refinance
A refinance transaction in which the mortgage amount generally is limited to the sum of the unpaid principal balance of the
existing first mortgage, closing costs (including prepaid items), points, and the amount required to satisfy any mortgage liens
if the documented proceeds of the subordinate financing were solely used to acquire the property (if the borrower chooses
to satisfy them), and other funds for the borrower’s use (as long as the amount does not exceed the lesser of $2000 or 2%
of the principal amount of the new mortgage).
Since closing costs include prepaid items, typically an investor will allow those to go back to the borrower, but you really need to clear that with the investor.
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