Cash-out refinance
A refinance where the new loan is larger than what you owe, and you receive the difference in cash. It turns home equity into money but raises your balance and resets the loan.
Also called: cash out refi, cash-out refi
Related terms
Replacing your current mortgage with a new one, usually to get a lower rate, change the term, or drop mortgage insurance. It comes with new closing costs, so the savings need to outweigh them.
The part of a property's value you own outright: its market value minus what you owe on loans against it. Equity grows as you pay down the loan and as the property gains value.
A revolving credit line secured by your home, which you can draw on and repay as needed. Rates are usually variable, and it typically sits behind the first mortgage as a second lien.
The loan amount divided by the property's value or price, whichever is lower, as a percentage. Lower LTV means less risk for the lender and often better pricing; above 80% usually triggers mortgage insurance on conventional loans.
A strategy of buying a property below value, rehabbing it, renting it, then doing a cash-out refinance to pull money back out and repeat. It depends on accurate repair costs and appraised value.