With home prices in over half of U.S. markets hitting record highs, many homeowners are sitting on a large amount of recently acquired equity. But how can you turn that equity into cash? One option is a cash-out refinance. This type of loan allows you to refinance your mortgage for a larger amount than what you currently owe and then take the difference in cash. The funds can be used for anything from home improvements and repairs to paying off debt or investing.
Whether you're trying to figure out how to build equity in a home or are already searching for the best mortgage refinance companies, there are many different factors to consider when selecting a lender or loan. We've compiled the following list of the five best cash-out refinance lenders to help you compare and find the best option for your needs.
Our Top Picks for Best Cash-Out Refinance Lenders
- NASB - Best VA Cash-Out Refinance Lender
- Freedom Mortgage - Best FHA Cash-Out Refinance Lender
- PNC Bank - Best Investment Property Cash-Out Refinance Lender
- Carrington Mortgage Services - Best Bad Credit Cash-Out Refinance Lender
- Rocket Mortgage - Best Online Cash-Out Refinance Lender
Best Cash-Out Refinance Lenders Reviews
- Access up to 100% of home equity for VA cash-out refinances
- Conventional loan cash-out refinances allow for loan-to-value ratio of up to 95%
- No lender fees for VA loans
- Minimum eligibility requirements aren't listed
- Requires minimum loan amount of $175,000
- Little information provided about lender fees on non-VA loans
Why we chose it: With no lender fees on its VA cash-out refinances and the ability to convert up to 100% of the equity in your home into cash, NASB is an excellent choice for veterans looking to refinance.
Founded nearly 100 years ago and with over $30 billion in home loans processed over the last 10 years, North America Savings Bank (NASB) is a reliable option for many borrowers looking to refinance their mortgage. NASB offers cash-out refinances for conventional loans, FHA loans and VA loans.
NASB stands out as one of the best VA cash-out refinance lenders, as it doesn't charge any fees for VA loans and allows veterans to access up to 100% of the equity in their homes. NASB's current rates (including its VA cash-out refinance rates) are displayed on a convenient page on its website, making it easy for potential borrowers to compare.
The lender states that its conventional loan refinancing allows qualified homeowners to get a cash-out refinance with up to a 95% loan-to-value (LTV) ratio. An LTV ratio is the amount left on your loan compared to the appraised value of your home, meaning a loan with a 95% LTV ratio would give you access to 95% of the equity in your home.
On the downside, NASB doesn't provide much information about minimum credit score and debt-to-income ratio requirements for its refinance loans, making it difficult to know whether you'll qualify. Additionally, the lender's cash-out refinance loan requires a minimum loan amount of $175,000 and there is little information provided about the lender fees you may be charged on non-VA loans.
- Low minimum credit score requirement for FHA loans
- Several customer service options (online, phone and in-branch)
- Eagle Eye Program alerts you to new home financing opportunities
- Website doesn't provide much information about lender fees or rates
- Ranks low in J.D. Power's 2022 U.S. Mortgage Origination Satisfaction Study
Why we chose it: With a minimum credit score requirement of only 550 for its FHA cash-out refinance loans and a recent title of the nation's number one FHA lender, Freedom Mortgage is a great choice for FHA borrowers looking for a cash-out refinance.
Freedom Mortgage has a maximum LTV of 80% and a minimum credit score requirement of 550 for its FHA cash-out refinance loan. This is significantly lower than the 580 to 620 minimum required by most other mortgage lenders, meaning that more borrowers will be able to qualify with Freedom Mortgage. The company's conventional cash-out refinance loan has a maximum LTV ratio of 80% and a minimum credit score requirement of 620.
Additionally, the company offers its unique Eagle Eye alert program, which alerts borrowers to new home financing opportunities, lower rates and other special offers.
Unfortunately, Freedom Mortgage does not provide much information about the fees you may be charged for your loan or what rates are currently available. The company ranked low in J.D. Power’s 2022 U.S. Mortgage Origination Satisfaction Study in terms of customer satisfaction (663/1000).
- Allows refinancing for investment properties
- Easy to get a custom rate quote
- Ranked above average in J.D. Power's 2022 U.S. Mortgage Origination Satisfaction Study
- Limited branch locations
- Only allows up to 80% LTV for conventional and jumbo cash-out refinances
Why we chose it: While plenty of banks offer cash-out refinance services, many of them restrict which types of properties will qualify. PNC Bank does not limit its cash-out refinances to primary owner-occupied properties, making it a great option for those looking to refinance an investment property.
PNC Bank offers a variety of cash-out refinance mortgage products, including options for conventional, jumbo, VA and FHA loans. Its conventional loan cash-out refinancing is available for primary homes, secondary homes and investment properties.
Interested borrowers can easily get a custom rate quote for their cash-out refinance by entering their home value, loan amount, credit score range and ZIP code into a calculator on the lender's website. Another plus is that PNC Bank scored above average in J.D. Power’s 2022 U.S. Mortgage Origination Satisfaction Study with a score of 732/1000 versus the industry average of 716.
The bank has limited branch locations and only allows up to 80% LTV for conventional and jumbo cash-out refinances. While this may not suit everyone’s needs, the LTV restriction aligns with many of its competitors.
- Offers refinance programs with flexible credit requirements
- Offers refinancing to those with recent history of bankruptcy or foreclosure
- Flexible refinance loans don't require private mortgage insurance
- Doesn't directly provide loans in North Dakota and Massachusetts
- Must speak with a loan officer to pre-qualify and complete application
Why we chose it: Carrington Mortgage Services offers three specialized refinance loans that allow borrowers with credit scores as low as 550 to qualify.
Carrington's Flexible Advantage Refinance, Flexible Advantage Plus, and Prime Advantage loans help those with lower credit scores and past negative credit activity (e.g., bankruptcy, foreclosure, etc.) obtain access to refinancing options that they may not be able to qualify for with traditional lenders.
The Flexible Advantage program allows for credit scores as low as 550 and up to $250,000 in cash-out, while the Flexible Advantage Plus program allows for credit scores as low as 620 and up to $500,000 in cash-out. The Prime Advantage program has the highest credit score requirement of 660 but allows for up to $750,000 in cash-out.
All of these programs will take borrowers with histories of bankruptcy, foreclosure, short sale and late payments (bankruptcy and foreclosure must be 36 months out to qualify for Flexible Advantage). They also don't require mortgage insurance, making them more affordable for some borrowers.
In addition to these programs, Carrington offers cash-out refinances for conventional, FHA, USDA and VA loans. Unfortunately, Carrington does not provide direct loans to North Dakota and Massachusetts residents, although customers can obtain loans from correspondent carriers in those states. The company also only offers a partially online pre-qualification and application process, meaning you must speak with a loan officer to get started.
- Allows borrowers to access up to 80% of their home's value
- Fast online pre-approval process
- Ranked first in J.D. Power's 2022 U.S. Mortgage Origination Satisfaction Study
- No physical branches
- Little information listed about lender fees
Why we chose it: Rocket Mortgage was one of the first online mortgage lenders and is considered a pioneer in the home lending industry. With a fast application process and plenty of of online resources, Rocket Mortgage is a great choice for borrowers who want a fully digital experience.
In addition, the company also ranks first in J.D. Power's 2022 U.S. Mortgage Origination Satisfaction Study — giving borrowers peace of mind that they are working with a reliable lender who puts customer service first.
Rocket offers cash-out refinancing for conventional, FHA, and jumbo loans. The online pre-approval process is quick and easy to complete, helping borrowers determine how much money they can access from their home's equity early in the process. While Rocket Mortgage doesn’t have any physical branches, its loan products can be obtained through affiliated brokers.
Furthermore, the company does not provide much information about their fees on their website, so it pays to shop around for the best deals before committing.
Other cash-out refinance lenders we considered
While the following lenders didn't quite make our top five list, they still may be worth considering when seeking a cash-out refinance lender.
- Works with those who are self-employed or with non-traditional sources of income
- Almost completely online cash-out refinance process
- Discounts for existing Sofi members
- Limited loan options
- Limited information listed about lender fees
- Must sign up to see rates
While it's mostly known for student loan refinancing, SoFi also offers cash-out refinances for conventional and jumbo loans that extend to those who are self-employed or have non-traditional sources of income. Unfortunately, the lender doesn't provide any refinancing options for government loans (e.g., FHA, VA), and it lacks some transparency when it comes to disclosing fees and cash-out refinance interest rates.
- Offers cash-out refinancing and HELOCs
- Mostly online process
- Displays current rates on website
- Doesn't serve loans in New York or Hawaii
- Limited information listed about lender fees
New American Funding is a good option for those who have experience with the mortgage process and are comfortable navigating their way through an online session. The lender offers a wide range of refinancing options but doesn't serve all states (no loans in New York or Hawaii). Plus, the company doesn't disclose many of its fees until after a loan application has been submitted, which can be an issue for those who want to know all the details upfront.
- Website has a cash-out refi calculator
- Displays current cash-out refi rates on website
- Access up to 100% of home equity for VA cash-out refinances
- Doesn't list minimum credit score or debt requirements
- Sample rates assume high credit score
- Doesn't list maximum LTV
Guaranteed Rate's website displays current rates for a variety of refinance loans and also features a useful mortgage cash-out refinance calculator. While this is convenient for comparison shopping, potential borrowers should know that the website's sample rates are based on a hypothetical borrower with a 760 credit score. Guaranteed Rate doesn't list any minimum credit score or debt-to-income ratio requirements, which can make it tough for potential borrowers to gauge their eligibility.
Cash-Out Refinance Lenders Guide
The process of refinancing your home can be a complicated and time-consuming task full of jargon and paperwork. To help you understand the key terms and processes, we have compiled the following refinancing cash-out guide.
What is a cash-out refinance?
A cash-out mortgage refinance allows you to access a portion of your home equity as cash and use it for other purposes. The term home equity refers to the difference between the amount you still owe on your mortgage and the value of your property. In other words, it's the amount of money you could potentially get if you sold your house today. The funds from a cash-out refinance are generally tax-free and can be used for anything, including debt consolidation, home improvement projects, college tuition, major purchases or even investing.
How does a cash-out refinance work?
When you apply for a cash-out refinance, you take out a new loan that is bigger than your existing mortgage balance, and the difference between the two loans is given to you in cash. The amount of cash you can get depends on the value of your home, how much equity you have built up and the specific lender's maximum loan-to-value (LTV) ratio. Many lenders have a maximum LTV ratio between 80% and 90%. For example, if your home is valued at $500,000, you still owe $100,000 on your mortgage and the lender's maximum LTV ratio is 80%, you could take out a new loan of up to $300,000 (($500,000 X 80%) - $100,000).
How to find the best cash-out refinance lender
Finding the right lender for a cash-out refinance can be a challenge, so it's important to do your research. The following section outlines some of the main steps you take when conducting your search.
1. Research and compare multiple cash-out refinance lenders
The best way to find the right lender for your cash-out refinance is to compare multiple lenders side by side. Look at factors such as the types of loans available, fees and closing costs. You should also compare customer reviews and ratings to see what past customers say about each lender.
2. Evaluate loan interest rates and repayment terms
When considering any loan, you should pay special attention to the interest rate and repayment terms. A high interest rate means that you will end up paying more in total over the life of the loan, so it's important to compare lenders and find one with a competitive rate.
The repayment term refers to how long it takes to pay off the loan. In some cases, it might be helpful to extend the repayment term to lower your monthly payments while in other cases, it's better to keep the repayment term as short as possible. Make sure to evaluate the tradeoff between the interest rate and repayment term before committing to a loan.
3. Ask for recommendations
If you're having trouble finding a lender, it's also a good idea to ask for recommendations from friends and family that have recently gone through the process. Ask them about their experience and whether they would recommend the lender they used. This can be an invaluable source of information and help you narrow down your list of potential lenders quickly.
4. Consider your specific needs and financial goals when looking for a cash-out refinance lender
Everyone's financial goals and needs are different. You might be a veteran looking for a VA loan, or a real estate investor looking to tap into an investment property's equity. Different lenders specialize in different types of loans and sometimes offer unique loan terms that can't be matched by other lenders. This is why it's important to take the time to consider your specific needs before deciding on a cash-out refinance lender.
5. Read and understand the fine print
Before signing any loan documents, be sure to read and understand the terms and conditions of the loan agreement. Make sure you're aware of all the closing costs associated with the loan as well as any additional fees that might be included. By conducting your due diligence in advance you'll be able to make an informed decision about taking out a loan and avoid any unwelcome surprises down the road.
6. Consult with a mortgage professional
Lastly, it's always a good idea to consult with a mortgage professional before making any loan decisions. A reputable mortgage professional can provide you with valuable insight and advice on the different loan options available and help ensure you make an informed decision about taking out a loan. They may even be able to help you secure a better loan rate or lower closing costs than what's available from other lenders.
HELOC vs cash-out refinance vs home equity loan
While pursuing a refinance with cash out is one of the most popular ways to access your home equity, there are other options available that may be a better fit for you. Two of these alternatives are home equity lines of credit (HELOC) and traditional home equity loans.
A HELOC is a line of credit that also uses your home as collateral. The difference is that a HELOC functions much like a credit card. You can withdraw any amount from the line of credit and repay it on a regular basis during what’s called the draw period. You’ll only pay interest on the amount withdrawn. However, once the draw period ends, you’ll start paying interest and principal on any outstanding balances.
A home equity loan works like a traditional loan in that you're given one lump sum and then have to pay back the amount borrowed plus interest over a fixed period of time. The difference between this and a personal loan is that your home is used as collateral to secure the loan. This typically results in lower interest rates and more favorable terms than you would find with a personal loan.
Both HELOCs and home equity loans are second mortgages on top of your existing mortgage while cash-out refinance loans replace your current mortgage with a larger loan. Due to this, cash-out refinances are usually easier to qualify for than home equity loans and HELOCs as the lender will have first priority in the event of a foreclosure.
No matter which option you choose, it's important to remember that taking out any sort of loan against your home puts you at risk of losing your property if you can't make payments. Make sure to carefully research your options and consult a qualified professional before making any decisions.
Cash-Out Refinance Lenders FAQs
How long does it take to get money from a cash-out refinance after closing?
Is a cash-out refinance a good idea?
Is a cash-out refinance taxable?
How much can I get from a cash-out refinance?
How We Chose the Best Cash-Out Refinance Lenders
To evaluate the top cash-out refinance companies, we looked at several factors ranging from customer reviews and loan terms to fees and qualification requirements. The following are the most important criteria we used:
- Fees: We looked at what fees cash-out refinance lenders charge, such as origination and closing costs.
- Qualifications: We considered various cash-out refinance eligibility requirements (e.g., credit score, debt-to-income ratio, LTV).
- Loan terms: We examined the loan terms offered by each cash-out refinance lender, including the interest rates and repayment terms.
- Customer reviews: We looked at what customers had to say about their experience with each cash-out refinance lender.
- Customer support: We evaluated the range of customer support options available from each lender.
- Types of loans: We looked at the types of loans offered by each cash-out refinance lender, such as FHA, VA and conventional loans.
- Accessibility: We considered the availability of each lender's products in different states and how many physical branches they have.
- User experience: We looked at the user experience of each lender's website or mobile app.