Turn your home equity into cash
Turn your home equity into cash for what matters most. Consolidate debt, renovate, or cover life's biggest expenses with one flexible loan.
What is a cash-out refinance?
A cash-out refinance replaces your current mortgage with a new one for a higher loan amount, allowing you to convert a portion of your home equity (must have 20% remianing after refinancing) into untaxable cash. You receive the difference between your new loan amount and your existing mortgage balance to use for expenses like home improvements, debt consolidation, education, or other major financial goals. It's a flexible way to access up to 80% of your home's value while refinancing into a new mortgage. Unlike a home equity line of credit (HELOC), a cash-out refinance is not a second mortgage or a revolving line of credit; instead, it replaces your current mortgage and give you a one-time lump sum of cash. It also gives you the opportunity to lower your mortgage rate (if eligible), adjust mortgage terms, or get rid of mortgage insurance (if eligible).
Highlights
Why use a cash-out refinance
Cash-out refinance example
Let's say your home is worth $400,000 and you still owe $300,000 on your current mortgage. That means you've built $100,000 in home equity. If you qualify for a cash-out refinance, you could refinance into a new $320,000 mortgage (max cash out you can take is 80% of your home value/must have 20% equity remaining after refinance). The remaining $20,000 is paid to you as a lump sum of cash to use for home improvements, debt consolidation, education expenses, or other financial goals.
| Current mortgage | After cash-out refinance | |
| Mortgage balance | $300,000 | $320,000 |
| Home equity | $100,000 | $80,000 |
| Cash you receive | $0 | $20,000 |
Cash-out refinance vs. other ways to access equity
There are several ways to access the equity you've built in your home. A cash-out refinance replaces your current mortgage and provides cash upfront, while a HELOC and home equity loan let you borrow against your equity without replacing your existing mortgage. Each option has its own advantages depending on how you plan to use the funds and whether you want a lump sum or ongoing access to credit.
Cash-out refinance
Replace your existing mortgage with a new one and receive a lump sum of cash from your available home equity. Best for homeowners who need a larger amount of money for major expenses.
- First-lien loan
- Replaces your current mortgage
- One monthly payment
- Funds are given as a lump sum of cash
- Fixed or adjustable rates
HELOC
Keep your current mortgage and access a revolving line of credit that you can borrow from as needed. Best for ongoing or unpredictable expenses like home renovations.
- Second-lien loan
- Doesn't affect your current mortgage
- Two payments per month (one for current mortgage, one for HELOC)
- Funds are given as revolving line of credit (use what you need)
- Adjustable rates
Home equity loan
Keep your current mortgage and receive a one-time lump sum with fixed monthly payments. Best for homeowners who know exactly how much they need to borrow and prefer predictable payments.
- Second-lien loan
- Doesn't affect your current mortgage
- Two payments per month (one for current loan, one for home equity loan)
- Funds given as revolving line of credit (use what you need)
- Usually fixed rates
Is a cash-out refinance right for you?
A cash-out refinance may be a good fit if you:
- Have built equity in your home
- Need a larger amount of cash
- Want one new mortgage instead of multiple loans
- Plan to stay in your home for several years
- Are comfortable replacing your existing mortgage
Things to consider before getting a cash-out refinance
While a cash-out refinance can be a great option for many borrowers, it might not be right for everyone. Here are some things to be aware of before you get a cash-out refinance:
- Your mortgage will increase
- Your monthly payment may change
- Your interest rate may be different from your current mortgage
- Closing costs typically apply
- You'll have to pay off all of what you borrow, regardless of if you use it or not
How it works
- Talk with a loan officer
Discuss your goals and determine whether a cash-out refinance is the right fit - Apply for a cash-out refinance
Complete your application and provide the required financial documents. - Appraise your home
If required, we'll order a home appraisal to determine your home's current market value and available equity - Finalize your loan
We'll review your application, appraisal, and finances to determine your final loan amount and terms - Close & receive your cash
Your current mortgage is paid off, your new loan takes its place, and you receive your cash after closing - Put your equity to work
Use your funds for home improvements, debt consolidation, education expenses, or other financial goals.
Frequently Asked Questions
We’re here to help! Find answers to your everyday banking questions.
A cash-out refinance replaces your existing mortgage with a new, larger mortgage, allowing you to convert a portion of your home equity into cash. The funds can be used for home improvements, debt consolidation, education expenses, major purchases, or other financial goals.
You can take out a maximum of 80% of your home's appraised value. The exact dollar amount depends on your home's current market value, your remaining mortgage balance, your credit profile, income, and the loan program you qualify for.
You need to have at least 20% equity remaining after your cash-out refinance. The exact amount varies by loan program, property type, and borrower qualifications. Your loan officer can review your available equity and determine your options.
It depends on your financial goals. A Cash-Out Refinance replaces your existing mortgage and provides a one-time lump sum of cash, while a HELOC keeps your current mortgage in place and gives you access to a revolving line of credit that you can borrow from as needed.
Yes. Many homeowners use a cash-out refinance to pay off high-interest credit cards, personal loans, or other debts, simplifying multiple monthly payments into one mortgage payment.
Absolutely. Home renovations are one of the most common reasons homeowners choose a cash-out refinance. Funds can be used for projects like kitchen and bathroom remodels, room additions, roof replacements, HVAC upgrades, and other eligible improvements.
Because your existing mortgage is replaced with a new loan, your interest rate, monthly payment, loan term, and loan balance may change. Your loan officer will review your options and help you understand how a cash-out refinance could affect your overall financial picture.
In most cases, yes. A home appraisal helps determine your home's current market value and how much equity may be available. Some borrowers may qualify for an appraisal waiver, depending on the loan program and lender guidelines.
Generally, no. The funds you receive from a Cash-Out Refinance are considered loan proceeds rather than taxable income. However, tax situations vary, so it's always a good idea to consult a qualified tax professional about your specific circumstances.