A cash-out refinance replaces your existing first mortgage with a new, larger loan and gives you the difference in cash at closing. It is the most aggressive way to tap equity because it touches your entire first mortgage, not just a slice of equity behind it.
Most lenders allow up to roughly 80 percent of the appraised value on a primary residence cash-out. Your existing balance is paid off with the new loan, and the remaining proceeds become cash. The new loan has its own rate, term, and payment that fully replace the old one.
Walk through a full comparison on the cash-out refinance overview page or run the numbers in the cash-out refinance calculator.
A cash-out refinance often wins when your current first mortgage no longer fits your situation, when you want one fixed payment instead of a first plus a second, or when you are consolidating higher-interest debt and value predictability.
If your existing first mortgage has very favorable terms you do not want to give up, a HELOC or home equity loan that sits behind it is often the better fit. The right tool depends on what your current first looks like and what the cash is for.
Related glossary terms
Compare three loan structures, calculate potential access, stress-test variable rates and use a fillable comparison worksheet.
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Both let you tap home equity. The right tool depends on what you need the money for, how long you need it, and what your current first mortgage looks like.
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