Current cash-out refinance rates

Written by

At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money.

What is a cash-out refinance?
How does cash-out refinancing work?
How much can you get in a cash-out refinance?
Is a cash-out refinance a good idea?
Cash-out refinance FAQs

About our Mortgage Rate Tables: The above mortgage loan information is provided to, or obtained by, Bankrate. Some lenders provide their mortgage loan terms to Bankrate for advertising purposes and Bankrate receives compensation from those advertisers (our "Advertisers"). Other lenders' terms are gathered by Bankrate through its own research of available mortgage loan terms and that information is displayed in our rate table for applicable criteria. In the above table, an Advertiser listing can be identified and distinguished from other listings because it includes a "Next" button that can be used to click-through to the Advertiser's own website or a phone number for the Advertiser.

Availability of Advertised Terms: Each Advertiser is responsible for the accuracy and availability of its own advertised terms. Bankrate cannot guaranty the accuracy or availability of any loan term shown above. However, Bankrate attempts to verify the accuracy and availability of the advertised terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. Click here for rate criteria by loan product.

Loan Terms for Bankrate.com Customers: Advertisers may have different loan terms on their own website from those advertised through Bankrate.com. To receive the Bankrate.com rate, you must identify yourself to the Advertiser as a Bankrate.com customer. This will typically be done by phone so you should look for the Advertisers phone number when you click-through to their website. In addition, credit unions may require membership.

Loans Above $726,200 May Have Different Loan Terms: If you are seeking a loan for more than $726,200, lenders in certain locations may be able to provide terms that are different from those shown in the table above. You should confirm your terms with the lender for your requested loan amount.

Taxes and Insurance Excluded from Loan Terms: The loan terms (APR and Payment examples) shown above do not include amounts for taxes or insurance premiums. Your monthly payment amount will be greater if taxes and insurance premiums are included.

Consumer Satisfaction: If you have used Bankrate.com and have not received the advertised loan terms or otherwise been dissatisfied with your experience with any Advertiser, we want to hear from you. Please click here to provide your comments to Bankrate Quality Control.

What is a cash-out refinance?

A cash-out refinance is a particular type of mortgage refinance, utilized by borrowers whose home has appreciated significantly in value. You swap your current home mortgage for a bigger mortgage, pocketing the difference between the two loans (your current one and the new one) in a lump sum.

It essentially turns some of the equity you’ve built up in your home into spendable cash. If you need money for your child’s college tuition, home renovations, or any other purpose, a cash-out refinance can get you the funds while (potentially) lowering your mortgage rate.

How does cash-out refinancing work?

Cash-out refinancing works much like any other refinance: You apply for a new mortgage, the lender appraises the home, and — if you’re approved — you receive the new loan and use it to pay off the old.

The big difference is, in a cash-out refinance, you replace your current mortgage with a larger one, receiving the “extra” amount — which reflects a portion of your home’s equity — in cash. While you may also get a lower rate on the new loan, you may still pay more in interest overall because your total loan balance will be bigger, and your monthly payment will likely change as well.

Many mortgage lenders offer cash-out refinancing — here are some of the best. 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.

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

You can get up to 80 percent of your home’s current value in a cash-out refinance. You typically receive the cash shortly after closing.

Let’s say your home is valued at $300,000 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.

Note that FHA cash-out refinances are also limited to 80 percent of your home’s value, but with a VA cash-out refinance, you can get up to 100 percent.

Is a cash-out refinance a good idea?

If the following circumstances apply to you, a cash-out refinance could help you achieve your goals:

You want to renovate your home. If you’d like to do some major remodeling, a cash-out refinance can get you the funds to make it happen. If you’re undertaking an eligible project that increases the value of your home, you can deduct the mortgage interest, too.
You want to pay for your child’s tuition costs. This strategy can make sense if student loan interest rates are higher than the rate on your new mortgage.
You have high-interest debt. Maybe you’ve accumulated a significant amount of credit card or other high-interest debt and need to consolidate. You can use a cash-out refinance to accomplish this — as a secured debt, the interest rate is likely to be less than the APR for credit card balances.

A cash-out refinance might not be a good idea if:

Your interest rate will rise. Ideally, refinancing should lower your interest rate, not increase it. If the cash-out refinance offer you’re considering comes with a higher rate than the one you have now, rethink it.
You can’t afford the closing costs. Since closing costs can be 3 percent to 5 percent of your new loan amount, it’s important to make sure that expense won’t outweigh your potential savings, and that you have enough cash on hand if you’re not planning to roll them into the new loan balance.
You could have trouble repaying it. Whichever way you choose to use the cash, you need to make sure you’ll be able to repay the loan, or risk foreclosure. It’s best to withdraw only the cash you need, and put it toward projects that will give you some financial benefit, like a home renovation, which boosts your equity, or debt consolidation of higher-interest loans.

Cash-out refinance FAQs

You generally need at least 20 percent equity in your home to do a cash-out refinance because lenders usually don’t allow for more than 80 percent of the total equity to be in debt for non-VA borrowers.
Like other types of loans, cash-out refinances come with closing costs that can range from 3 percent to 5 percent of the new loan amount. Closing costs cover expenses such as appraisal, credit check and lender origination fees.
What about the tax implications of a cash-out refinance? Good news – the proceeds are not taxable. The money you receive from your cash-out refinance is essentially a loan you are taking out against your home’s equity. Loan proceeds from a HELOC, home equity loan, cash-out refinance and other types of loans are not considered income.

You can deduct the interest you pay on your new mortgage from your taxable income if you use the cashed-out funds to make capital improvements on your home. Deduction-eligible projects generally include permanent additions and home improvements that increase the property’s value, extend its longevity or adapt it for new uses. Consider consulting with a tax professional to ensure the projects you’re doing qualify. It’s up to you to prove you used the money in a way that qualifies when you file your taxes, so save receipts and other paperwork associated with your projects.
In the low-rate world of 2021, a cash-out refi was a no-brainer. In 2023, with interest rates on the rise, alternatives to a cash-out refinance might better help you reach your goals. Two prime candidates are:
- A home equity line of credit. A HELOC lets you tap your home equity as you need it. This type of financing typically carries a variable interest rate.
- A home equity loan. This second mortgage carries a fixed interest rate.
A cash-out refinance replaces your current mortgage with a larger loan, with you taking the difference between the new and old loan in cash. Like other types of refinances, you can redefine the terms of your mortgage, such as the interest rate and term.

A home equity loan is a separate, second mortgage, and doesn’t change the terms of your primary home loan. Home equity loans generally have a higher interest rate than primary mortgages even with a cash-out refi, but the closing costs can be lower since the balance on a home equity loan is usually lower than that of a primary mortgage. Both typically require you to maintain at least 20 percent equity.

If your goal is to take out a significant amount of cash and get a lower rate, a cash-out refinance could be the better option. If you can afford both your first and second mortgage payments and don’t want to change the terms of your first mortgage — maybe you’ve already paid down most of it — a home equity loan might be the right option for you.

Current cash-out refinance rates

What is a cash-out refinance?

How does cash-out refinancing work?

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

Is a cash-out refinance a good idea?

Cash-out refinance FAQs

How much equity do you need to do a cash-out refinance?

What are the fees for a cash-out refinance?

How does cash-out refinancing impact my taxes?

What are some alternatives to a cash-out refinance?

What is the difference between a cash-out refinance vs. home equity loan?

Mortgage rates in other states