Cash-out refinance
Replacing your mortgage with a larger one and receiving part of the difference.
What it is
A cash-out refinance replaces your current mortgage with a larger one. Part of the new loan pays off what you owe and part comes back to you, after the transaction's costs and adjustments. Because it replaces the first mortgage, it changes the terms on the whole balance, not only the cash you take out. That makes the mortgage you already have an important part of the decision.
Who it's for
- Homeowners considering using equity for a defined need
- Borrowers comparing one new mortgage with a second loan or line of credit
- Owners who want the cost of changing the whole first mortgage made visible
The essentials
The first mortgage is replaced
Unlike a home equity loan or HELOC, a cash-out refinance changes the loan on your full mortgage balance. Compare the old and new terms side by side.
Cash out is still borrowed money
The money becomes part of a loan secured by your home. The reason for borrowing should be strong enough to justify that risk and cost.
Closing costs reduce the result
The amount available on paper is not necessarily what reaches you. The new payoff, fees and other closing adjustments all affect the final proceeds.
Common questions
- How is this different from a HELOC?
- A cash-out refinance replaces your first mortgage. A HELOC normally sits beside it as a second mortgage. Compare what happens to the full debt, not only the cash you receive.
- Can a cash-out refinance lower my payment too?
- It can change the payment, but no direction is guaranteed. The new rate, term, balance, insurance and costs all affect the result. A current comparison is the only useful answer.
Source: CFPB research on cash-out refinance mortgages. Current program documents and the borrower's final disclosures control.
The CFPB source establishes that a cash-out refinance replaces the first mortgage with a larger loan and differs from home equity products that leave the first mortgage in place. A lender's current disclosures control the actual proceeds, costs and terms.
Related programs
Rate-and-term refinance
Replacing the mortgage you have with a new one built around a different rate or term.
Home equity loans and HELOCs
Borrowing against equity you already have, as a lump sum or as a line you draw from.
Conventional loans
The standard purchase loan, and the one FHA usually gets measured against.
This page is general information about loan programs, not a commitment to lend or an offer of credit. Program availability, terms, and qualification depend on your situation and are subject to underwriting approval. Tareq Maayta, NMLS #1443073. Loans through Finance USA Corporation, NMLS #135625. Equal Housing Opportunity.