What is a Cash-Out Refinance?
A cash-out refinance allows homeowners to replace their current mortgage with a new loan for a higher amount than what they owe. The difference is paid out in cash, which can be used for home improvements, debt consolidation, investments, or other financial needs.
Benefits of a Cash-Out Refinance
✔ Access to Large Sums of Cash – Use your home’s equity for major expenses.
✔ Lower Interest Rates – Typically offers lower rates than personal loans or credit cards.
✔ Debt Consolidation – Pay off high-interest debts and simplify payments.
✔ Home Improvement – Increase your home’s value by reinvesting in upgrades.
✔ Potential Tax Benefits – Interest may be tax-deductible if used for home improvements (consult your tax advisor).
Conventional Cash-out Refinancing
A conventional cash-out refinance is typically easier to obtain than an FHA or VA refinance, both of which have special eligibility guidelines. Even so, conventional cash-out refinances still have income and credit score requirements.
VA Cash-out Refinancing | FHA Cash-out Refinancing
If you qualify, government-backed FHA and VA cash-out refinances offer lucrative terms.
How Does a Cash-Out Refinance Work?
✔ Replace your current mortgage with a new one for a larger amount.
✔ Receive the difference in cash after closing.
✔ Use the funds however you choose – home renovations, paying off high-interest debt, college tuition, or investing.
For example, if your home is worth $300,000 and you owe $200,000, you may qualify to refinance for $250,000 and take $50,000 in cash (depending on lender guidelines).
Access funds to meet goals
Pay for college, renovate your home – there’s a lot you can do with a cash-out refinance.
Consolidate debt and simplify
Consolidate credit card balances, auto loans, student loans and other debt into a single monthly payment.
Get a better rate
Take advantage of competitive rates for an economical way to fund major purchases and other needs.
Home Improvement
Make home improvements to increase the value of your home, pay for college tuition, pay off high-interest credit card debt, or buy a vacation home.
