Cash-out refinance: turn equity into cash

How a cash-out refinance works

The lender orders an appraisal to set your home's value. The new loan pays off your existing mortgage, and the remaining amount, minus closing costs, goes to you at closing. You then have one mortgage payment based on the new loan.

Cash-out refinance vs. HELOC vs. home equity loan

• Cash-out refinance: One new first mortgage. Makes sense when you'd also like to change your current rate or term.
• HELOC: A line of credit alongside your current mortgage that you draw from as needed. Keeps your existing first mortgage in place.
• Home equity loan: A lump-sum second mortgage, also leaving your first mortgage alone.

If your current rate is one you'd like to keep, a second-lien option may be worth comparing. A broker can show both.

Who it fits

• Homeowners with meaningful equity
• People planning a large renovation
• Borrowers consolidating higher-interest debt
• Investors pulling equity from rentals, including with DSCR cash-out loans
• Self-employed owners using bank statement cash-out programs

Things to weigh

• You're borrowing against your home, so missed payments put it at risk.
• Closing costs apply.
• Resetting the term can increase total interest.
• Equity, seasoning and use-of-funds rules vary by lender and program.

Documents you may need

ID, income documents or bank statements, your current mortgage statement, homeowners insurance and property tax information. Requirements vary by lender.

How Turn Times helps

Turn Times is a licensed mortgage broker, not a lender. Instead of offering one company's products, we compare cash-out refinance options from wholesale lenders and walk you through the differences in plain language. Here's how it usually goes:

1. Tell us your goal. A short conversation about the property, your timeline and what matters most to you.
2. We search pricing across wholesale lenders. We look at which wholesale lenders' guidelines may fit your situation, and a licensed loan officer compares their pricing and terms.
3. You choose. We lay out the trade-offs so you can pick the option that works for you.
4. We manage the loan to closing. Appraisal, title, conditions and updates along the way.

Every loan is subject to the lender's underwriting, and approval isn't guaranteed. We arrange loans for properties in California and Colorado.

Frequently asked questions