Loan options
This is the one option that touches your existing mortgage. You take out a new, larger loan, pay off the old one, and keep the difference. Whether that is smart depends almost entirely on the rate you have now.
See whether it makes sense for youNo credit pull. One licensed local loan officer.
This is probably you, and it might not be
This one splits sharply. If you bought before 2022 and hold a rate in the threes, a cash-out refinance is almost certainly the most expensive way for you to access money, and most of this page will explain why.
If you bought more recently at six or seven percent, or you are carrying an FHA loan with mortgage insurance you would like to shed, the picture flips. You could take cash out and lower your rate in the same move.
The same homeowner, two different rates
$290,000 owed, $75,000 needed. Illustrative rates, not quotes.
Same house, same cash, opposite answers. At 3.1% the refinance costs about $721 a month more before you touch a dollar of the money. At 7.5% it saves you money. Your current rate decides this, not the product.
Find where your rate landsChoose a cash-out refinance if
Your current rate is at or above today's market, you are staying long enough to earn back closing costs, and you would rather have one payment than two.
Choose a second lien if
You hold a low rate. Keeping it and adding a smaller loan behind it is nearly always cheaper, even though the rate on that second loan looks higher.
Say you owe $290,000 and want $75,000 in cash. You take a new mortgage of roughly $365,000 plus closing costs, the lender pays off your existing $290,000, and the remainder comes to you. You now have one loan, one payment, and one rate, and the rate you had before is gone permanently.
That last part is the entire decision. If your current rate is three percent and today's rate is closer to seven, you are not simply borrowing $75,000. You are also repricing the $290,000 you already owed, and the cost of doing that usually dwarfs the cost of the cash itself.
If your current rate is high, the logic reverses. Replacing an expensive mortgage while pulling cash out can lower your payment and give you the money at the same time, which is why this is the right answer for some homeowners and clearly the wrong one for others.
Because you are refinancing the whole balance, closing costs are calculated on the whole balance, commonly a few percent of the new loan. Rolling them in means borrowing them, and paying interest on them for decades. Ask for the break-even point in months, and compare it honestly against how long you plan to stay.
A cash-out refinance makes sense when
Your current rate is at or above today's market, so replacing it costs you nothing and may save money.
You want one payment rather than two, and the overall math still works.
You need a large sum that would be difficult to support as a second lien.
You are staying in the home long enough to earn back the closing costs comfortably.
Look elsewhere when
You hold a low rate from recent years. Giving it up to access cash is usually the most expensive route available.
You are moving within a few years and closing costs will not have time to pay for themselves.
You only need a modest amount, where a second lien is cheaper and simpler.
Resetting to a new thirty year term would meaningfully extend how long you carry the debt.
How much can I take out?
Lenders generally limit cash-out refinances to a percentage of your appraised value, often around eighty percent for a conventional loan on a primary residence. Different loan programs have different limits, and your credit and income affect what is available.
Does my payment always go up?
Not necessarily. If you are replacing a high rate, or stretching over a longer term, the payment can fall even while the balance rises. Whether that is a good outcome depends on total interest paid over the life of the loan, which is a separate question from the monthly figure.
How does this compare to a second loan?
A second loan leaves your first mortgage alone and adds a payment. A cash-out replaces it. Our comparison tool on the home page runs both against your actual rate and balance and shows you where the answer flips.
Is the interest tax deductible?
Sometimes, and the rules differ depending on how the cash is used. Speak to a tax professional about your specific situation.
Find out whether this beats a second lien for you.
A licensed local loan officer will run both and tell you which is genuinely cheaper.
Get my real numbersFigures on this page are illustrative and are not an offer, quote, or commitment to lend. Rates, terms, limits, and approval are set by the lending partner and vary by borrower, property, and credit. Refinancing extends or resets the term of your debt and may increase the total interest paid over the life of the loan.