11 Best Cash-Out Refinance Lenders

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Utilizing your home’s equity can be a wise choice, whether you’re looking to pay off high-interest debt, support a home remodel, pay for college tuition, or make progress toward another financial objective. This can be accomplished through a cash-out refinance, in which you refinance your mortgage for more than what you owe and cash out the difference. 

Numerous mortgage lenders offer cash-out refinancing, and we reviewed several of them to identify the best options. In 2022, here are our recommendations for the best cash-out refinance lenders.

Best Cash-Out Refinance Lenders

  • RECOMMENDED
  • BEST FOR
  • MIN. CREDIT SCORE

Top Cash-Out Refinance Lenders

Best Overall Cash-Out Refinance Lender
Rocket Cash-Out Refinance
APPLY NOW
On Rocket Mortgage's Secure Website
Rates & Fees
Rocket Mortgage
  • NMLS#
    3030
  • Min. Credit Score
    620
  • Learn More
  • Mortgage Details

Rocket Mortgage has a loan portfolio that is typical of nonbank lenders. Conventional loans, FHA loans, and VA loans are available with fixed or adjustable interest rates. In addition to the usual 15- or 30-year mortgage, a customized fixed-rate conventional loan with a period ranging from eight to 29 years is available.

On its homepage, Rocket Mortgage provides sample rates for fixed-rate buy and refinance loans, and you can obtain more detailed rate information by visiting the rates page. There, you’ll find their most current interest rates and APR, as well as the points you’d need to buy up front to get that rate and APR combination for 30- and 15-year fixed-rate house loans, as well as 30-year FHA and VA loans.

>> More: Rocket Mortgage Review

Best for Fast Closing Times
Better Cash Out Refinance Loan
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On Better's Secure Website
Rates & Fees
Better Mortgage
  • NMLS#
    330511
  • Min. Credit Score
    620
  • Learn More
  • Mortgage Details

Better Mortgage is an exclusively online mortgage company based in New York City. Because of its money-saving incentives and easy application process, the company has been designated one of the finest cash-out refinance lenders.

Borrowers in 46 states can acquire a fast online cash-out refinance preapproval in minutes on most main loan types. Better’s rates and fees are available on its website, and the CFPB reports a lower-than-average rate of consumer complaints in 2020. (1 complaint per 1,000 loans).

>> More: Better Mortgage Review

Best for Customer Service + Bad Credit
GuaranteedRate Cash-Out Refinance
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On GuaranteedRate's Secure Website
Rates & Fees
GuaranteedRate
  • NMLS#
    2611
  • Min. Credit Score
    580
  • Learn More
  • Mortgage Details

Homeowners seeking a mortgage refinance can choose from any loans Guaranteed Rate offers for home purchases, including the FHA 203(k) and Fannie Mae HomeStyle renovation loans.

Guaranteed Rate’s refinance offerings all result in creating a new mortgage. However, refinancing may not be the ideal option if you want to extract some equity from your house. In such a scenario, consider having Guaranteed Rate arrange a home equity loan or line of credit through a partner lender on your behalf.

>> More: GuaranteedRate Mortgages Review

Best for Cash-Out Refinance Government Loans
Veterans United Cash-Out Refinance Mortgage Rates
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On Veterans United's Secure Website
Rates & Fees
Veterans United
  • NMLS#
    1907
  • Min. Credit Score
    620
  • Learn More
  • Mortgage Details

Veterans United Home Loans, founded in 2002, is a full-service direct mortgage lender with a workforce of over 4,700 employees. The lender is based in Columbia, Missouri, and specializes in VA loans, although it also provides several other lending products.

Refinancing options from Veterans United Home Loans include rate-and-term, cash-out, and VA Interest Rate Reduction Refinance Loans (IRRRLs, also known as VA streamline refinances). The lender publishes refinance rates on its website daily, and you can estimate your savings using its online refinance calculator.

>> More: Veterans United Home Loans Review

Best Bank for Cash-Out Refinance
Chase Bank Cash-Out Refinance
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On Chase's Secure Website
Rates & Fees
Chase
  • NMLS#
    399798
  • Min. Credit Score
    620
  • Learn More
  • Mortgage Details

Chase offers a comprehensive selection of mortgage solutions with lower rates and costs than many other lenders. Chase gives up to $2,500 in grants to first-time homebuyers who use Dreamaker, FHA, or VA loans. Refinancers may also be eligible for $2,500 grants.

Chase previously offered home equity lines of credit (HELOC); however, these are now suspended. To get cash out of your home equity with Chase, you’ll need to do a cash-out refinance.

>> More: Chase Mortgages Review

Best Traditional Bank Cash-Out Refinance
BoA Cash-Out Refinance
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On Bank of America's Secure Website
Rates & Fees
Bank of America
  • NMLS#
    399802
  • Min. Credit Score
    620
  • Learn More
  • Mortgage Details

Bank of America offers a variety of lending programs, including geographically targeted programs that might be especially beneficial to low- and moderate-income home buyers. The Charlotte, North Carolina-based lender provides a variety of purchase and refinance loans, including 15-, 20-, and 30-year fixed-rate loans and 30-year adjustable-rate mortgages with periods of 5/6, 7/6, and 10/6.

On the Bank of America website, borrowers can examine current refinance rates. Although quoted rates contain points, no lender costs are included. The refinance application process with the bank is similar to the purchase loan application process.

>> More: Bank of America Mortgage Review

Best for Government Home Loans Cash-Out Refinance
Caliber Cash-Out Refinance
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On Caliber Home Loans's Secure Website
Rates & Fees
Caliber Home Loans
  • NMLS#
    15622
  • Min. Credit Score
    580
  • Learn More
  • Mortgage Details

Customers interested in refinancing with Caliber can do it online or by calling and speaking with one of their loan experts. Caliber has a checklist outlining the general processes needed in refinancing and notes that refinances can be completed in as little as ten days in some situations.

Their summary of the refinance procedure involves consulting with one of their loan advisers to discover the best loan for your particular circumstances. Since they only provide personalized rate quotations, users must consent to a hard credit pull to receive information about rates, fees, or reductions.

>> More: Caliber Home Loans Review

Best Credit Union Cash-Out Refinance
ACU Cash-Out Refinance Loans
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On Alliant Credit Union's Secure Website
Rates & Fees
Alliant Credit Union
  • NMLS#
    197185
  • Min. Credit Score
    N/A
  • Learn More
  • Mortgage Details

Alliant Credit Union mortgages can also be utilized to refinance an existing loan. You can also use the Alliant Advantage Mortgage program to refinance into a lender-paid mortgage insurance ARM if you have as low as 5% equity in your property. The credit union’s online rate quote tool provides a detailed explanation of refinancing fees, closing charges, and rates.

Best Customer Service
New American Funding Cash-Out Refinance Rates
APPLY NOW
On New American Funding's Secure Website
Rates & Fees
New American Funding
  • NMLS#
    6606
  • Min. Credit Score
    620
  • Learn More
  • Mortgage Details

New American Funding provides a wide range of mortgage loans, including FHA and VA loans and cash-out refinance loans that do not require government insurance. Despite being family-owned, the mortgage lender is one of the largest in the country in terms of origination volume.

Because they provide a variety of VA and FHA refinance alternatives, they are an excellent resource for potentially utilizing a larger amount of the equity in your home if you qualify. Their current interest rates differ based on the length of the refinance. Their current pricing is deemed quite competitive in this sector.

>> More: New American Funding Review

Best for Funding Times
LoanDepot Cash-Out Refinance Rates
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On LoanDepot's Secure Website
Rates & Fees
LoanDepot
  • NMLS#
    174457
  • Min. Credit Score
    620
  • Learn More
  • Mortgage Details

LoanDepot is a top-10 refinance lender that offers a variety of purchase and remodeling home loans. LoanDepot has a lot of experience with refinancing. According to data from the Home Mortgage Disclosure Act, regular and cash-out refinances together accounted for more than 75% of the lender’s loan volume in 2021.

However, because the lender’s online mortgage application process requires you to interact with a loan officer over the phone, you won’t be able to complete the process entirely online.

>> More: LoanDepot Mortgage Review

Best for Online Experience
SoFi Cash-Out Refinance
APPLY NOW
On SoFi Home Loans's Secure Website
Rates & Fees
SoFi Home Loans
  • NMLS#
    1484615
  • Min. Credit Score
    620
  • Learn More
  • Mortgage Details

SoFi offers purchase and refinance mortgages for primary and secondary residences that will be occupied for at least a year. Mortgages for investment properties are also available from the lender.

For a SoFi cash-out refinance, you can’t borrow more than 80% of the property value, and for other mortgage refinances, you can’t borrow more than 95%.

>> More: SoFi Home Loans Review

How to Choose the Best Cash-Out Refinance Lender

#1. Cash-Out Refinance Rates 

The interest rate you receive is significantly determined by the amount of equity in your property, your credit history, loan-to-value (LTV), debt-to-income ratio (DTI), and your income. However, finding the best rate might also be influenced by the lender. That is why receiving multiple quotations is beneficial to you. A 0.50 percent difference may not seem like much, but it might save you thousands of dollars over the life of the loan.

#2. Understand the Fees

When comparing lenders, obtaining the lowest interest rate on a cash-out refinance isn’t the only issue to consider. Two online mortgage lenders can advertise the same interest rate while charging vastly different closing fees. A low rate combined with significant closing fees can chip away at the savings you expected from the low rate.

Looking at the loan’s APR is a sure-fire technique to evaluate the difference between offers. In addition to the interest rate, the APR considers many of the loan’s fees over the loan’s whole period.

#3. Online Experience and Customer Service 

Another critical aspect to remember is the customer service rating. Refinancing may be highly time-consuming and costly if the wrong product is chosen. Finding a company that provides excellent customer service indicates that they are eager (and capable) to assist you in locating the perfect fit for you.

The lengthy application process is sometimes the largest hurdle. In our digital age, many of us like to do everything electronically. Regrettably, not all lenders are yet on board. If this is crucial to you, look for a lender who allows you to complete all or most of your applications online.

#4. Credit Score Requirements

Every cash-out refinance loan lender comes with its mortgage credit score requirement. While most cash-out refinance lenders may accept a lower credit score, this may be in exchange for a high-interest rate. When searching for a mortgage lender, you should consider the credit score requirements and how it affects your loan interest rate.

How Does Loan-to-Value Ratio Factor into Cash-Out Refinance? 

One of the most critical variables influencing your ability to cash-out refinance is your LTV ratio. For example, if your LTV ratio exceeds 80%, your lender may be more hesitant to accept your refinance application. As a result, you may have to pay more fees and mortgage insurance.

Your LTV ratio influences your interest rate as well. Homeowners refinancing with high LTVs rarely qualify for the best mortgage cash-out refinance rates.

The LTV ratio is just one of several variables influencing your ability to refinance. The following are the maximum LTV ratios for the most typical single-family home buy and refinance loan programs:

CONVENTIONAL LOANS

LoanPercentage
Purchase97%
Rate-and-Term Refinance97%
Cash-Out Refinance80%

VA LOANS

LoanPercentage
Purchase100%
Rate-and-Term Refinance100%
Cash-Out Refinance90%

FHA LOANS

LoanPercentage
Purchase96.5%
Rate-and-Term Refinance97.75%
Cash-Out Refinance80%

USDA LOANS

LoanPercentage
Purchase100%
Rate-and-Term Refinance100%
Cash-Out RefinanceNot Allowed

What Are the Benefits of Cash-Out Refinance? 

Below are some of the benefits associated with doing a cash-out refinance:

A lower interest rate is possible.

Though cash-out refinance rates are often higher than purchase loan rates, you may still be able to get a better deal if mortgage rates were higher when you bought your house. In 2018, for example, the average rate on a 30-year fixed mortgage was 4.94 percent. These days, the rates are much lower. (However, a rate and term refinancing make more sense if you merely want to lock in a lower interest rate on your mortgage and don’t need the cash.)

There is only one loan. 

Because it’s a refinance, you’ll just have to make one monthly payment. Other methods of leveraging home equity necessitate the use of a second mortgage.

More money is available. 

Cash-out refinancing is advantageous for significant purchases such as home renovations or college tuition because you may typically borrow far more than you could with a personal loan or credit card.

Consolidation of debts. 

Paying off high-interest credit cards with funds from a cash-out refinance might save you thousands of dollars in interest.

A better credit rating. 

Paying off your credit cards in full with a cash-out can help you improve your credit score by lowering your credit utilization ratio or how much credit you’re using.

What Are the Downsides to Cash-Out Refinance? 

Below are some of the downsides associated with doing a cash-out refinance:

The possibility of foreclosure. 

Because your property serves as security for any mortgage, you risk losing it if you cannot make the payments. If you utilize a cash-out refinance to pay off credit card debt or pay for education, you’ll be replacing unsecured debt with secured debt, which is typically discouraged due to the risk of losing your house.

New Loan Terms. 

The terms of your new mortgage will change from those of your prior loan. Recheck your interest rate and costs before agreeing to the revised conditions. Consider the total interest you’d pay throughout the term of the loan. Assuming you’re refinancing into a new 30-year mortgage, this could increase years of repayment – potentially adding a significant amount of interest even if your rate has been reduced.

Time-consuming. 

You’re getting a new mortgage, and while you won’t have to go through as many hoops as you would with a purchase loan, underwriting can still take weeks. If you require finances quickly, such as if your leaky roof is causing significant water damage and must be replaced immediately, refinancing may not be the best option.

Closing expenses. 

Closing costs for a cash-out refinance are the same as for any other refinance. Refinance closing expenses are typically 2% to 5% of the loan amount, or $4,000 to $10,000 for a $200,000 refinance. This can significantly reduce the amount of money you receive at closing.

Private Mortgage Insurance.

Private mortgage insurance is required if you borrow more than 80% of the value of your house. For example, if your property is worth $200,000 and you refinance for more than $160,000, you will almost certainly be required to pay PMI. Private mortgage insurance typically costs 0.55 percent to 2.25 percent of your loan amount each year. A 1% PMI on a $180,000 mortgage would cost $1,800 per year.

Cash-Out Refinance vs. Rate-and-Term Refinance

Mortgage providers offer their lending terms for various home refinance choices. The most prevalent are cash-out refinance and rate and term. What is the difference between the two terminologies, and why does it matter?

Rate-and-Term Refinance

A rate and term refinance is a transaction in which a new mortgage replaces an old one. A refinance can be used to substitute a new interest rate on a loan. This is the “rate” portion of the rate and term refinancing. It’s simple to understand if it’s clear that refinancing to a lower rate will benefit the borrower with reduced overall monthly payments.

Homeowners can also change the term during a traditional mortgage refinance. Most lenders provide 10, 15-, 20-, 25-, and 30-years loan lengths. Why are there so many different terms? A longer term keeps the monthly payments lower than a shorter period, but it takes longer to pay down the mortgage, and there is substantially more interest paid over the life of the loan with a 30-year loan than a 20-year loan, for example.

Finally, a borrower can refinance both the rate and the term. Obtaining a cheaper interest rate by shortening or lengthening the loan period. This is a rate and term choice. Keep in mind that interest rates on longer-term loans are typically higher.

Cash-Out Refinance

A cash-out loan refinances the interest rate, term, or both while also withdrawing equity in the form of cash at the closing table. Most conventional loans enable borrowers to withdraw up to 80 percent of their home’s equity when refinancing and withdrawing cash, while there are somewhat better terms if the loan is at 75 percent or even 70 percent of the current appraised value of the home.

At times, cash-out refinancing may have a higher interest rate than a rate and term refinance. It should be noted that homeowners with a VA loan can cash out up to 100 percent of the loan to value.

What Can I Use the Cash for on a Cash-Out Refinance? 

Cash-out refinancing allows you to cash out on the equity you’ve built up in your house. You can spend the lump sum of money you receive from the refinance on pretty much anything. For example, cash-out refinancing could be a suitable method to pay for a home renovation project, debt consolidation, or urgent car repairs.

Do Cash-Out Refinance Have Higher Rates? 

Yes, in a nutshell. Expect to pay slightly more interest on a cash-out refinance than on a no-cash-out refinance. This is because lender’s view cash-out loans as riskier.

Bear in mind that when you employ a cash-out refinance, your new loan amount will be greater than your existing mortgage balance. Additionally, when someone borrows more money, the likelihood of the loan defaulting increases.

Mortgage lenders compensate for this risk by increasing the interest rate somewhat, which means you will pay more over the life of the loan.

How Do I Find the Best Cash-Out Refinance Rates?

Apart from pricing and lender credibility, narrowing your selection comes down to what is ideal for you and your unique circumstances. Depending on your objectives and needs as a borrower, one lender may be a better choice than another. Consider the following:

Experience

Each lender may specialize in a specific form of refinance loan. If you’re doing a cash-out refinance, you’ll want to work with a lender who understands and can serve this type of transaction.

Trust and comfort

You should never feel compelled to make a loan decision that you are not comfortable with. Choose a lender who helps you feel at ease with each financial decision.

Refinancing with a current bank or lender

If you undertake a cash-out refinance with the same lender who originated your previous loan, they may give discounts or incentives for refinancing with them. Furthermore, several banks provide benefits or discounts if you also hold an account with them, such as checking, savings, money market, or CDs.

Inquiring about a cash-out refinance with your existing lender is an excellent place to start. But don’t stop there. Compare at least two to three quotations from different lenders to ensure you get the best offer.

How Much Home Equity Do I Need for Cash-Out Refinance?

Borrowers must typically have at least 20% equity in their houses to qualify for a cash-out refinance or loan, which translates to a maximum loan-to-value (LTV) ratio of 80% of the home’s current value.

Divide the amount of your existing or new loan by the appraised worth of your home to calculate your loan-to-value (LTV) ratio. For example, if your home is valued at $200,000 and you owe $120,000 on it, you have $80,000 in equity. The remainder (your mortgage balance) is the portion of your home that the bank still owns.

Using the above example, you would divide your mortgage balance ($120,000) by the appraised value of your home ($200,000) to determine your LTV: 60%.

Summary: Best Cash-Out Refinance Lenders

Bottom Line: Best Cash-Out Refinance Lenders

Finally, cash-out refinancing can be a valuable financial tool, but you must be aware of the hazards before taking out a new mortgage to access the equity in your house.

If you’re convinced that you’ll be able to repay the loan and that the benefits exceed the drawbacks, it’s time to shop around for the best loan for your scenario.

 

Elijah Bishop
Elijah Bishop

Elijah A. Bishop is a Senior Personal Finance Writer who has been writing about real estate and mortgages for years. He has a Bachelors of Arts Degree in Creative writing from Georgia State University and has also attended the Climer School of Real Estate. He also holds a realtor license and has been in and out of the US mortgage industry as a loan officer. Bringing over 15 years of experience, Elijah produces content that analyzes ethnicities, race, and financial well-being. His areas of expertise are mortgages, real estate, and personal loans.