Cash-out is a distinct loan purpose
A cash-out refinance replaces your current mortgage with a larger one and pays you the difference. Investors view taking equity out as somewhat higher risk than a straight refinance, so pricing adjustments for cash-out commonly apply.
The main pricing factors
- Loan-to-value (LTV): the new loan amount divided by the appraised value. Higher LTV usually means larger pricing adjustments; each program also sets a maximum.
- Credit score: combined with LTV in the pricing grids conventional investors use.
- Occupancy: primary residence, second home and investment property are priced differently.
- Property type: condos and multi-unit homes can carry adjustments.
- Program: conventional, FHA, VA and jumbo cash-out each have their own rules.
Compare against the alternatives
If your current rate is lower than what a new loan would carry, replacing the whole balance may cost more over time than a home equity loan or home equity line of credit (HELOC) on just the amount you need. Compare the total cost, not just the new payment.
Watch the total closing costs
Cash-out refinances include appraisal, title, recording and lender fees. Fees financed into the loan reduce the cash you actually receive.
Keep reading
This page is general education. Program rules change; confirm current requirements with the official sources linked here and with a licensed lender.