Understanding Cash-Out Refinance
A cash-out refinance replaces your current mortgage with a larger one and pays you the difference. It's a way to turn home equity into cash for renovations, debt consolidation, education costs or an investment.
Because it replaces your first mortgage, a cash-out refinance makes the most sense when the new loan's terms compare reasonably with what you have now. If you'd rather keep your existing first mortgage, a HELOC or home equity loan may fit better.
Who it's a good fit for
- Homeowners with significant equity
- Borrowers consolidating higher-interest debt
- Owners funding a remodel, addition or accessory dwelling unit (ADU)
- Investors pulling equity out of a rental to buy another property
Key details
- The amount you can take out is limited by your home's appraised value and program guidelines.
- Conventional, FHA and VA cash-out options each have different limits.
- Closing costs apply, just like any refinance.
- Your existing mortgage is paid off and replaced by the new one.
Cash-Out Refinance questions
How much cash can I take out?
It depends on the appraised value, your current balance and the loan program. Each program caps the new loan as a share of the home's value.
Cash-out refinance or HELOC: which is better?
If your current mortgage has favorable terms you want to keep, a HELOC or home equity loan leaves it alone. If you'd refinance anyway, a cash-out refinance combines both into one loan. Jake can compare the total cost of each.
Is cash from a refinance taxable?
Loan proceeds generally aren't considered income, but interest deductibility depends on how you use the money. Check with a tax professional.
Cash-Out Refinance financing around Eastern Washington
- Tri-Cities, WA: Homeowners who bought before recent price growth may have meaningful equity to tap.
- Franklin County, Washington: Helps growing families fund additions or consolidate debt.
Related programs
Mortgage Refinance
Replace your current mortgage to change your rate, term or loan type.
Learn moreHome Equity Line of Credit (HELOC)
A revolving credit line secured by your home that you draw on as needed.
Learn moreHome Equity Loan (HELOAN)
A fixed lump-sum second mortgage that leaves your first mortgage in place.
Learn moreInformation on this page is general and educational. Loan approval, terms and eligibility depend on your full application, credit, property and current program guidelines.