Cash in with Cash-Out Refinancing

A cash-out refinance replaces your existing mortgage with a new home loan for more than you owe on your house. The difference goes to you in cash and you can spend it on home improvements, debt consolidation or other financial needs. You must have equity built up in your house to use a cash-out refinance.

Want to learn more? Let’s take a closer look.

What are Cash-Out Refinance loans?

Cash-out refinancing is a type of mortgage loan that allows homeowners to refinance their existing mortgage for a higher amount than what is currently owed, and then receive the difference in cash. The cash-out portion of the loan is based on the equity that the homeowner has built up in their home, which is the difference between the current market value of the home and the remaining mortgage balance. The homeowner can use the cash for any purpose, such as paying off high-interest debt, funding home renovations, or investing in a business.

Check out the loan guidelines, pros and cons for Cash-Out Refinance loans below.

Pros of cash-out refinancing:

  1. Access to cash:
    Cash-out refinancing can provide homeowners with access to a large sum of cash that they can use for any purpose.
  2. Lower interest rate:
    If the current mortgage interest rates are lower than what the homeowner is currently paying, they may be able to secure a lower interest rate with a cash-out refinance.
  3. Potential tax benefits:
    Homeowners may be able to deduct the interest paid on the cash-out portion of their loan on their tax returns.


Cons of cash-out refinancing:

  1. Higher mortgage balance:
    A cash-out refinance will increase the homeowner's mortgage balance, which means they will owe more money and have higher monthly mortgage payments.
  2. Closing costs:
    Like any other mortgage loan, a cash-out refinance will come with closing costs, which can add up to thousands of dollars.
  3. Risk of foreclosure:
    If the homeowner is unable to make their new, higher mortgage payments, they may be at risk of foreclosure.


Good candidates for cash-out refinancing:

  1. Homeowners with equity:
    Cash-out refinancing is only available to homeowners who have built up equity in their home.
  2. Strong credit score:
    To qualify for a cash-out refinance, homeowners will need a strong credit score and a solid credit history.
  3. Lower interest rates:
    If current mortgage interest rates are lower than what the homeowner is currently paying, they may be able to save money by refinancing with a cash-out loan.
  4. Clear financial goals:
    Homeowners who have a clear plan for how they will use the cash from the refinancing and who are able to manage the increased mortgage payments may be good candidates for a cash-out refinance.

Contact one of our knowledgeable loan specialists who can help guide you through our extensive suite of loan products for a mortgage solution tailored to meet your specific needs.