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Cash-out refinance

Conventional cash-out refinance

A cash-out refinance replaces your mortgage with a larger loan and returns the difference to you at closing. Pricing, maximum LTV, and requirements differ from a standard rate-and-term refinance.

Who this may fit

Homeowners with meaningful equity considering a lump sum for a specific purpose, weighed against the change in mortgage cost.

Key decision factors

  • Purpose and expected return on the cash used
  • Max cash-out LTV per program
  • Pricing premium vs a standard refinance
  • Total interest impact over your remaining time in the home

Illustrative example

Common mistakes

  • Treating cash-out proceeds as free money
  • Ignoring pricing differences vs a standard refinance
  • Overlooking alternatives like a HELOC or second lien

Questions to ask a licensed loan officer

  • What's the max cash-out LTV for my property type?
  • How does cash-out pricing compare to a standard refinance today?
  • Are there alternatives that fit my goal at lower total cost?

Sources

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