11.3.25
What Is a Cash-Out Refinance?
Learn how cash-out refinancing lets homeowners access the equity in their homes.
If you’ve ever wondered what a cash-out refi is, here’s a quick overview to get you started.
How cash-out refinancing works
Cash-out refinancing lets homeowners replace their mortgage (if they have one) with a larger loan, receiving the difference in cash. The amount depends on equity in the home and mortgage balance; most lenders require at least 20% equity to remain.
Homeowners typically use the funds to:
- Make home improvements
- Pay for college tuition
- Consolidate high-interest debt
These uses can improve your home’s value or strengthen your financial position.
How to get a cash-out refinance
The process is similar to applying for a traditional mortgage:
- Submit an application.
- The lender evaluates your credit, income, debt and home value.
- Most lenders require a minimum score of 620.
Alternatives to cash-out refinancing
Other ways to access your home’s equity include:
- Home Equity Loan – A lump sum loan with a fixed interest rate.
- Home Equity Line of Credit (HELOC) – A revolving line of credit you can draw from as needed.
All loans subject to approval. Rates, terms, and conditions are subject to change may vary based on credit worthiness, qualifications, and collateral conditions.
