Access your equity by refinancing your mortgage
Replace your current mortgage with a larger one and pocket the difference as cash. Use it for renovations, debt payoff, or anything else you need.
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Key parameters for a cash-out refinance.
How cash-out refinance works
A cash-out refinance is straightforward: you replace your current mortgage with a new, larger one and receive the difference in cash.
Current mortgage paid off
Your existing mortgage balance is paid in full using the proceeds of the new loan.
New, larger mortgage at a new rate
You take out a new first-lien mortgage for more than you currently owe, locking in today's rate and terms.
Difference paid to you as cash
The amount above your old balance (minus closing costs) is deposited directly into your account.
Example
Cash-out refi vs HELOC vs personal loan
Each option taps into (or replaces) different funding sources. Here is how they compare.
| Cash-out refi | HELOC | Personal loan | |
|---|---|---|---|
| How it works | Replaces your mortgage with a larger one | Second lien; revolving credit line | Unsecured installment loan |
| Rate | Fixed, typically lower | Variable (usually prime + margin) | Fixed, typically highest |
| Impact on mortgage | Replaces existing mortgage | No change to first mortgage | No impact |
| Closing costs | 2-5% of loan amount | Low or none | None |
| Speed | 21-30 days | 2-6 weeks | 1-7 days |
| Tax deductible | Yes, if used for home improvements | Yes, if used for home improvements | No |
| Best for | Large lump sum + rate improvement | Ongoing access to funds | Small amounts, fast funding |
Popular uses for cash-out
There are no restrictions on how you use the funds. These are the most common reasons borrowers choose a cash-out refinance.
Home improvements
Renovations can increase your home's value, potentially offsetting or exceeding the cost of borrowing.
Debt consolidation
Replace credit-card rates of 20%+ with a single, lower fixed-rate payment.
Investment property down payment
Use your primary home's equity to fund the down payment on a rental or second property.
Education and major expenses
Cover tuition, medical bills, or other large planned expenses at mortgage-level rates.
Is cash-out right for you?
A cash-out refinance is not ideal for every situation. Consider these factors before applying.
Makes sense when...
- You can also improve your interest rate or shorten your term
- You need a large lump sum for a high-value purpose like renovations
- You want to consolidate high-interest debt into a single low-rate payment
- You have significant equity (at least 20% after the new loan)
May not make sense when...
- Your current rate is much lower than today's rates
- You plan to sell the home in the near future
- You only need a small amount of cash (a HELOC may be better)
- You would struggle to afford higher monthly payments
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Frequently asked questions
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