Cash-Out Refinance
Replace your mortgage and take cash from your equity.
Overview
A cash-out refinance replaces your existing mortgage with a new, larger loan based on your home's current appraised value, with the difference between the new loan and your old balance paid to you in cash at closing. It's a way to access built-up equity through a single fixed-rate loan rather than a separate line of credit.
Who It’s For & What You’ll Need
- Sufficient home equity, since lenders cap the resulting loan-to-value ratio and require some equity to remain
- A qualifying credit score and debt-to-income ratio
- A current appraisal to establish your home’s value
- Proof of income and employment, similar to a purchase loan
- An existing mortgage in good standing
Benefits
- Access equity for renovations, debt consolidation, education, or other major expenses through one fixed-rate loan
- Potentially consolidate higher-interest debt into a lower mortgage rate
- Adjust your rate and term at the same time you access cash
- A predictable, fixed monthly payment compared with a variable-rate credit line
Common Scenarios
- A homeowner funding a major renovation by tapping equity built up over several years of ownership.
- A borrower consolidating higher-interest credit card or personal loan debt into their mortgage.
- A homeowner covering a large one-time expense, like education costs, using home equity instead of a personal loan.
Frequently Asked Questions
How is a cash-out refinance different from a HELOC?
A cash-out refinance replaces your entire mortgage with one new, larger loan and gives you cash at closing. A HELOC leaves your existing mortgage untouched and adds a separate, revolving credit line on top of it.
Is the interest on a cash-out refinance tax-deductible?
It depends on how the funds are used and current tax law — interest may be deductible when funds go toward buying, building, or substantially improving the home. Please consult a qualified tax advisor about your specific situation.
How much cash can I access?
Lenders cap the loan-to-value ratio of the new loan, meaning you can typically access a portion of your equity, not all of it. The maximum depends on the loan program, your credit, and the property type.
Does a cash-out refinance reset my loan term?
Yes, since it’s a brand-new loan, your term resets based on whatever new term you select, whether that’s a fresh 30 years or a shorter term.
Related Calculators
Run your own numbers before you apply:
Ready to Move Forward with Cash-Out Refinance?
Start your application, or talk it through with a loan officer first — whichever fits where you are.