Situation
Cash-out refinance
Convert equity into cash at a first-lien rate, subject to an 80% loan-to-value ceiling, its own price adjustments and a twelve-month ownership rule.
The honest bitIf you have a 3% first mortgage, a cash-out refinance is usually the wrong tool. A second lien or a HELOC keeps the cheap first loan intact, and we will tell you that rather than sell you a refinance.
What this programme actually is
A cash-out refinance pays off the existing mortgage and returns the difference to you in cash. Because the lender is now exposed to a larger balance on the same property, the pricing grid adds cash-out specific adjustments on top of the usual credit and loan-to-value ones.
The ceiling for a conventional owner-occupied cash-out is 80% of appraised value. Some borrowers try to solve a shortfall by ordering a second appraisal; underwriting will use the lower of the two, so that rarely works. The productive route is to reduce the cash requested or to look at a second lien instead.
The honest comparison is against a home equity line. If your first mortgage carries a rate well below today's market, refinancing the whole balance to reach the equity is expensive. Blending the rates on paper, for the full new balance rather than only the cash withdrawn, is the calculation that settles it.
Cash-out refinanceWhat is included when I run it
- A blended-rate comparison: cash-out refinance against a second lien or a line of credit
- The true cost of the cash calculated on the full new balance, not just the withdrawal
- Delayed financing reviewed where the property was bought for cash in the last six months
- Debt consolidation modelled with the payoff timeline, not just the new payment
- Appraisal expectations set before the order, with recent comparable sales reviewed
- Investment property cash-out priced separately, since adjustments there are much heavier
How the file moves
- 01Equity and seasoning checkTwelve months of ownership for conventional, with delayed financing as the exception.
- 02Comparison modelRefinance against second lien, over five and ten years, on the full balance.
- 03AppraisalCash-out files almost never get a waiver. Budget for a full interior report.
- 04UnderwritingExpect questions on the use of funds and on any debts being paid at closing.
- 05RescissionThree business days after signing on a primary residence, before funds disburse.
- 06DisbursementWire or cheque on day four. Payoffs to creditors are made by the settlement agent, not by you.
Why people choose it
First-lien pricing on the whole balance
Lower than a second lien rate, which matters when the first mortgage is already near market.
One payment
Consolidating a first, a second and consumer debt into a single amortizing loan.
Fixed rate on the cash
Unlike a variable-rate line of credit, the payment does not move when the index does.
Renovation without a construction loan
Straightforward where the work is cosmetic and the value already supports the balance.
What moves your price
| Factor | How it behaves |
|---|---|
| Loan-to-value | 80% is a hard ceiling on conventional owner-occupied. There is no exception route. |
| Credit score | Cash-out adjustments are steeper than purchase adjustments at every score band. |
| Occupancy | Investment property cash-out is capped lower and priced considerably higher. |
| Existing rate | The single biggest factor. Blending a 3% first into a market-rate loan is expensive. |
You must keep at least 20% after the cash-out on a conventional owner-occupied loan. On a $500,000 appraised value that means a maximum new loan of $400,000, inclusive of closing costs if you finance them.
Often, when your first mortgage is far below market. A line of credit leaves the cheap loan alone and charges you only for what you draw. We model both before recommending either.
A conventional exception that lets you take cash out within six months of buying a property with cash, up to the documented purchase price, without waiting for the twelve-month seasoning.
Yes, generally to 75% loan-to-value on a one-unit investment property, with heavier price adjustments and reserve requirements than an owner-occupied file.
Is this the right programme for you
Twenty-five minutes on the phone will settle it. If a different programme is cheaper for your file, I will say so.
Three wholesale quotes on the same day's pricing, before you choose.