Cash-Out Refinance

A cash-out refinance is a type of mortgage refinance that lets you convert your home equity into cash. It replaces your existing home mortgage with a new, larger loan, and pays you the difference between the new and old mortgage amount at closing. Accessing equity and using the funds to consolidate debt or fund a major project are just a few reasons to use a cash-out refinance.

Access Your Equity

Use the equity in your home to pay for home improvements, college tuition or a down payment on a second home.

Consolidate Your Debt

Use the money to pay off high-interest debt, such as credit cards, personal loans and auto loans.

Lower Your Interest Rate

If you’d like to take advantage of lower interest rates and get cash in hand, cash-out refinancing may be the right choice for you. Keep in mind that while cash-out refinance rates may be slightly higher than those for traditional refinancing, the potential benefits of this type of loan can be significant.

Requirements and Qualifications

• Credit score – Your credit score helps determine the rate you’ll get. When it comes to refinancing, the higher your score, the better. If you’re a U.S. Bank client, you can check your credit score for free with our tool.
• Home equity – As a general rule, you should have at least 20% equity in your home before refinancing. You can calculate your home equity by subtracting the amount you owe on your mortgage from the amount your home is worth. For example, if your home is valued at $250,000 and you owe $150,000 on your mortgage, you have $100,000 in equity.
• Closing costs – A cash-out refinance comes with closing costs comparable to your first mortgage. Typically, you can expect to pay between 2% and 5% of the loan amount. So, on a $200,000 home loan refinance, you could pay between $4,000 and $10,000 in closing costs.