Mortgage

Cash-Out Refinance Replace your mortgage with a bigger one and pocket the difference from your home equity

Priya Shah By Priya Shah, Senior Mortgage Editor · Updated 2026-06-09
← All Glossary Terms Definition
A cash-out refinance replaces your existing mortgage with a larger loan and gives you the difference in cash, letting you tap your home equity. Because the new balance is bigger than what you owed, your loan amount and often your monthly payment increase. Lenders set a maximum loan-to-value (LTV) ratio, capping how much of your home's value you can borrow against, so you typically must keep some equity in the property. The exact LTV cap, interest rate, and closing costs vary by lender, loan type, and your credit profile. People use the cash for home improvements, debt consolidation, or other large expenses, but remember the loan is secured by your home, meaning the property is collateral if you default.
Also Known As
Cash-out refi Equity refinance Mortgage refinance with cash out Cash-out mortgage
Used in Context
  1. She chose a cash-out refinance to fund a kitchen remodel, replacing her old mortgage with a larger one and taking the equity difference as cash.
  2. Because the new loan pushed his loan-to-value above the lender's cap, he had to borrow less than he originally wanted on his cash-out refinance.
  3. A homeowner comparing offers through Dreamy Leads weighed a cash-out refinance against a home equity loan to pull cash from rising property value.
Related Terms
Mortgage Rate-and-Term Refinance Refinancing to change your rate or term without pulling out cash Mortgage HELOC (Home Equity Line of Credit) A revolving credit line secured by your home equity that you draw from as needed Mortgage LTV (Loan-to-Value) The percentage of a property's value financed by a mortgage — key to rates and PMI Mortgage Amortization The schedule that shows how each loan payment splits between principal and interest over time Mortgage Prepayment Penalty A fee some loans charge when you pay off the balance early Mortgage Mortgage Recast Lower your monthly payment by paying down principal without refinancing
Frequently Asked Questions

How much cash can I get from a cash-out refinance?

It depends on your home's value and your lender's loan-to-value cap, which limits how much you can borrow against your equity. You'll generally need to keep some equity in the home, so the cash available varies by lender, loan type, and your credit. Higher equity usually means more accessible cash.

Does a cash-out refinance increase my monthly payment?

Often, yes. A cash-out refinance increases your total loan balance because you're borrowing more than you owed, which can raise your monthly payment. The actual change depends on your new interest rate, loan term, and the amount of cash you take. Compare offers carefully before committing.

Is my home at risk with a cash-out refinance?

Yes. A cash-out refinance is secured by your home, meaning the property serves as collateral. If you can't make payments, you risk foreclosure. Because you're increasing your loan balance, it's important to be confident you can afford the new payment before tapping your equity this way.

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