Cash-Out Refinance
Turn your home equity into cash for renovations, debt consolidation, or investments. Access up to 80% of your home's value at mortgage rates.
Licensed in Georgia, Florida, Texas, and California • NMLS #2043109
How Cash-Out Refinancing Works
Replace your current mortgage and receive the difference in cash
Example Scenario:
What Happens at Closing:
Your new $320,000 loan pays off your old $250,000 mortgage, and you receive $70,000 in cash (minus closing costs of ~$6,000-9,000). You now have one mortgage payment at current market rates.
Important: If your current mortgage rate is significantly lower than today's rates, cash-out refinancing means you'll have a higher rate on the entire loan amount, not just the cash portion.
Popular Ways to Use Your Cash-Out Funds
What homeowners typically do with their equity
Home Renovations & Improvements
Finance kitchen remodels, bathroom upgrades, additions, or major repairs that increase your home's value.
Debt Consolidation
Pay off high-interest credit cards, auto loans, and personal loans. Replace multiple payments with one lower-rate mortgage payment.
Investment Property Down Payment
Use equity from your primary residence to fund down payments on rental properties or investment opportunities.
College Tuition & Education
Fund education expenses with a lower rate than student loans or PLUS loans.
Emergency Expenses & Medical Bills
Cover unexpected medical costs, legal fees, or major life events.
Business Investment
Fund a startup, expand an existing business, or invest in equipment.
Have a specific goal in mind? We'll help you determine if cash-out refinancing is the best option.
Discuss Your Goals with a Loan OfficerCash-Out Refinance vs. Other Options
Compare ways to access your home equity
| Option | Interest Rate | Typical Amount | Term | Pros | Cons |
|---|---|---|---|---|---|
| Cash-Out Refinance | 6.0-7.5% | Up to 80% LTV ($100k+ typical) | 15-30 years | Lowest rate, tax-deductible interest (consult CPA), one payment | Closing costs, resets mortgage term |
| HELOC (Home Equity Line) | 8.0-10.0% (variable) | Up to 85% CLTV | 10-year draw, 20-year repayment | No closing costs, pay interest only on what you use, keep existing mortgage | Variable rate risk, temporary draw period |
| Home Equity Loan (2nd Mortgage) | 8.0-11.0% | Up to 85% CLTV | 5-30 years | Fixed rate, keep existing first mortgage, fast closing | Higher rate than cash-out refi, two monthly payments |
| Personal Loan | 10.0-36.0% | $5k-$50k typical | 2-7 years | No home as collateral, fast approval | Much higher rates, not tax-deductible, lower max amounts |
Which Option Is Best?
- Choose Cash-Out Refinance if: You want the lowest rate, plan to stay long-term, or want to consolidate everything into one payment
- Choose HELOC if: You have an excellent first mortgage rate and want to keep it, or you need flexible access to funds over time
- Choose Home Equity Loan if: You want a fixed rate, need a specific lump sum, and want to preserve your low first mortgage rate
Cash-Out Refinance Requirements
Equity / LTV
At least 20% equity (max 80% LTV)
On a $400k home, you need $80k equity minimum. You can access up to $320k total loan ($400k × 80%)
Credit Score
620 minimum (680+ for best rates)
740+ score can save you 0.50-1.00% in interest rate
Debt-to-Income Ratio
Typically 43-50% max DTI
If you earn $8,000/month gross, total debt payments should be under $3,440-$4,000
Income Documentation
W2s or 1099s, tax returns, pay stubs, bank statements
Most lenders need 2 years tax returns + recent pay stubs. Self-employed need additional documentation
Property Requirements
Primary residence, second home, or investment property
Investment properties limited to 75% LTV. Second homes 70-75% LTV.
Cash-Out Refinance FAQs
How much cash can I take out when refinancing?
Most lenders allow up to 80% loan-to-value (LTV) for primary residences, meaning you must maintain at least 20% equity. Investment properties are typically limited to 75% LTV. Your maximum cash-out amount is (Home Value × 80%) - Current Mortgage Balance - Closing Costs.
Is cash-out refinance interest tax-deductible?
It depends on how you use the funds. Interest on cash used for home improvements is generally tax-deductible. Cash used for other purposes (debt consolidation, investments, personal expenses) may not be deductible. The Tax Cuts and Jobs Act (2017) changed these rules. Consult a tax professional for your specific situation.
Should I do a cash-out refinance if rates are higher than my current rate?
It depends on your goals. If you're consolidating high-interest debt (credit cards at 18-25%), even a 7% mortgage is a huge improvement. If you're funding value-adding renovations or buying rental property, the return may outweigh the rate increase. Run the numbers on total interest cost vs. benefit of accessing the cash.
How long do I have to wait to do a cash-out refinance?
For conventional loans, you typically need to wait 6 months after purchasing or last refinancing. Some programs allow "delayed financing" within 6 months if you paid cash. FHA loans require 12 months of payments before cash-out refinancing. Rules vary by lender and program.
What are the closing costs for a cash-out refinance?
Closing costs typically run 2-5% of the new loan amount. On a $300,000 loan, expect $6,000-$15,000 in costs including appraisal, title insurance, origination fees, and recording fees. You can roll these into the loan or pay out of pocket. Some lenders offer "no closing cost" options with slightly higher rates.
Can I do a cash-out refinance on an investment property?
Yes! Investment property cash-out refinances are limited to 75% LTV for conventional loans, 70-75% for DSCR loans. Rates are typically 0.5-1% higher than primary residences. Many investors use this strategy to pull equity from appreciating rentals to fund down payments on additional properties, creating a snowball effect.
Ready to Access Your Home Equity?
Get a free equity analysis and cash-out quote. We'll show you exactly how much you can access and what your new payment would be.
Licensed in Georgia, Florida, Texas, and California • NMLS #2043109