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Adjustable-Rate Mortgage (ARM) Cash-Out Refinance

What is a cash-out refinance?

In simple terms, a cash-out refinance replaces your current mortgage with another loan that: 

  • Pays off your current mortgage balance
  • Uses your home equity to provide additional funds for other purposes

Adjustable-rate mortgage

Fixed rate for initial period followed by adjustable rate 


  • Your interest rate and monthly principal and interest (P&I) payments remain the same for a defined initial period, then adjust annually when that initial period is over. 
  • Loans available in a variety of longer terms. 
  • Includes an interest rate cap that sets a limit on how high your interest rate can go. 


  • Typically ARMs have a lower initial interest rate than on a fixed-rate mortgage. 
  • The interest rate cap limits the maximum amount your P&I payment may increase at each interest rate adjustment and over the life of the loan. 
  • May provide flexibility if you expect future income growth or if you plan to move or refinance within a few years. 


  • Monthly principal and interest payments may increase when the interest rate adjusts. 
  • Your monthly principal and interest payments may change every year after the initial fixed period is over.

To help you determine whether a cash-out refinance can help you with your long-term financial goals, contact your home mortgage consultant.

Talk to us about your refinance goals and options. Get Started

If you are a service member on active duty, prior to seeking a refinance of your existing mortgage loan, please consult with your legal advisor regarding the loss of any benefits you are entitled to under the Servicemembers Civil Relief Act or applicable state law.

Principal and interest (P&I)
The 2 main components of your monthly payment. The principal portion reduces your loan balance, while the interest is your cost for using the principal. Your monthly payments may include taxes and insurance in addition to P&I.

Interest-rate cap
A limit on the amount your interest rate can increase. Periodic caps limit the increase from 1 adjustment period to the next. Lifetime caps limit the increase over the life of the loan.