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Current cash-out refinance rates

On Friday, March 01, 2024, the national average 30-year fixed refinance APR is 7.24%, according to Bankrate's latest survey of the nation's largest refinance ... lenders. Use Bankrate's rate table to compare today's cash-out refinance APRs.

What is a cash-out refinance and how does it work?

A cash-out refinance is a type of mortgage refinance that turns a portion of your home equity into cash. With a cash-out refi, you’ll swap your current mortgage for a bigger mortgage, pocketing the difference between the two loans (your current one and the new one) in a lump sum. You can use these funds for any purpose, whether it’s for a home renovation, college tuition or other expenses.

Cash-out refinancing works much like any other refinance: You’ll apply for a new mortgage, the lender will order an appraisal of the home and — if you’re approved — you’ll receive the new loan, which’ll pay off the original, and then repay that new loan over time in installments.

Many mortgage lenders offer cash-out refinancing. While you might be offered a good deal or perks with your current lender, shop around and compare refinance rates and fees between a few lenders.

Cash-out refinance requirements

As with any mortgage, you must meet certain financial criteria to qualify for a cash-out refinance. Here are a few of the general requirements:

  • Credit score: Most cash-out refinances require a credit score of 620 or higher.
  • Debt-to-income (DTI) ratio: Your DTI is a measure of your monthly debt payments against your income. Most lenders limit your DTI ratio to no more than 45 percent for a cash-out refinance.
  • Equity: You’re required to keep a minimum of 20 percent equity in your home. (The big exception to this is if you’re doing a VA cash-out refinance.)
  • Six months to a year of payments on your current mortgage. You typically have to wait at least six to 12 months to refinance your mortgage after the original loan closed, though there could be exceptions.

How much cash can you get in a cash-out refinance?

Many lenders allow you to tap up to 80 percent of your home’s current value in a cash-out refinance. Conventional and FHA cash-out refinances are limited to 80 percent of your home’s value, but with a VA cash-out refinance, you can get up to 100 percent. USDA loans don’t allow for cash-out refinancing.

Let’s say your home is valued at $400,000 and you have $100,000 left to pay on your mortgage. If you wanted to get $30,000 for a renovation, you’d cash out $30,000 and add that to your $100,000 balance, for a new loan totaling $130,000. You’ll receive the cash shortly after closing.

Should you do a cash-out refinance?

You can use money from a cash-out refinance however you want to, but some of the most common uses include:

  • Doing home improvement and renovation projects
  • Consolidating high-interest debt
  • Paying for education
  • Getting a down payment on an investment property

While there are valid reasons for a cash-out refinance, you should consider the pros and cons as well. They include:

Pros of cash-out refinance

  • Access to cash: You can turn your equity into a liquid asset you can use to cover home repairs or pay for college tuition, or anything else you need it for.
  • Increase your home value: If you use a cash-out refinance to renovate your home with a kitchen remodel or an addition, for instance, you could grow the value of your home.
  • Lower interest rates: Mortgages come with lower interest rates when compared to credit cards, personal loans and other forms of debt. You can use a cash-out refinance to pay off this higher-interest debt, which could save you money on interest and better your credit score by lowering your credit utilization.

Cons of cash-out refinance

  • Owing more money: A cash-out refinance replaces your old mortgage with a new, larger mortgage. This means you’ll owe more, and could have a higher monthly payment.
  • Closing costs: You’ll have to pay for some closing costs like you did for your original mortgage. For a cash-out refinance, the lender charges an appraisal fee, and might charge an origination fee, often a percentage of the amount you’re borrowing. With a cash-out, you’re getting a larger loan, so the origination fee reflects that.
  • Foreclosure risk: Unlike credit cards and personal loans, mortgages are secured debt, with your home as collateral. If you’re unable to make your mortgage payments, your home will eventually be subject to foreclosure.

How to get the best cash-out refinance rate

Start by focusing on your credit score and DTI ratio. Paying down your debts can help improve both of these factors. Also take some time to figure out how much cash you need from the cash-out refinance.

Next, use the rate table above to find lenders and compare offers from at least three. Assess both the interest rate and APR you’re quoted, noting that APRs are higher because they include points and fees.

Lender compare

Compare mortgage lenders side by side

Mortgage rates and fees can vary widely across lenders. To help you find the right one for your needs, use this tool to compare lenders based on a variety of factors. Bankrate has reviewed and partners with these lenders, and the two lenders shown first have the highest combined Bankrate Score and customer ratings. You can use the drop downs to explore beyond these lenders and find the best option for you.

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Garden State Home Loans

NMLS: 473163

State License: MB-473163

3.6

Rating: 3.6 stars out of 5
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Rating: 4.98 stars out of 5

5.0

562reviews

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Homefinity

NMLS: 2289

State License: 4965

4.5

Rating: 4.5 stars out of 5
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Recent Customer Reviews

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Rating: 4.94 stars out of 5

4.9

1060reviews

Cash-out refinance FAQ