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A cash-out refinance replaces your existing home loan with a new, larger home loan. At closing, you’ll receive the difference in cash, which you can use however you want.
The best cash-out refinance lenders offer competitive rates, a wide range of products, and a good customer experience. To get the best rate, you’ll want to shop around with several lenders.
Here are the best mortgage lenders for a cash-out refinance:
- Rocket Mortgage
- Caliber Home Loans
- PenFed Credit Union
- Guaranteed Rate
- Veterans United
- Bank of America
Best cash-out refinance lenders
Depending on what type of cash-out refinance loan you’re seeking, you’ll want to compare rates from multiple lenders and choose a lender that offers a customer experience tailored to your needs and preferences.
Keep in mind that certain lenders may not offer government-backed loans, such as VA loans. And the USDA doesn’t have a cash-out refinance loan program.
Best for: Borrowers preferring a fully online application process
Rocket Mortgage provides conventional, VA, and FHA cash-out refinancing with a digital, user-friendly application process. You can apply online or through the Rocket Mortgage mobile app. Eligible borrowers with a minimum 680 credit score can borrow up to 100% of their home equity through a VA loan.
- Fully digital application process
- Ability to apply and manage your loan through its mobile app
- Customer service available seven days a week
- Must apply to see personalized refinance rates
- Must apply to compare cash-out refinance options
- No brick-and-mortar locations
Learn More: Rocket Mortgage Review
Be sure to shop around and compare rates with multiple lenders if you decide to go with a cash-out refinance. You can do this easily with Credible — and you’ll be able to see your prequalified rates in only three minutes.
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Caliber Home Loans
Best for: Borrowers seeking access to local loan consultants
Caliber Home Loans lets you prequalify for a conventional cash-out refinance in just a few minutes. You can also speak with a locally based loan consultant or visit a branch to complete your application.
- Local branches and consultants available in all 50 states
- Ability to work with a specific loan consultant
- Easily accessible user reviews for local loan consultants
- Must create an account to view mortgage rates
- Initial prequalification only lists conventional cash-out rates; must complete full application to see federally insured rate options
- Poorly designed mobile app
See: Caliber Home Loans Review
PenFed Credit Union
Best for: Borrowers wanting to refinance through a credit union
PenFed Credit Union offers conventional and VA cash-out refinancing, in addition to the personalized approach to customer service that most credit unions employ. If you’re a new member, you’ll need to open a banking account with a minimum $5 deposit. Membership is free.
- Conventional and VA cash-out refinance loans
- Membership available to everyone
- Member discounts on several services, including home insurance and title service
- Must open a banking account before getting a loan
- Refinance rates aren’t available online
- No FHA cash-out refinance loans
Check Out: PenFed Mortgage Review
Best for: Borrowers wanting to refinance through an online bank
SoFi doesn’t offer FHA or VA loans but you may be able to find competitive rates on a conventional cash-out refinance. In addition to the conveniences that come with refinancing through an online bank, eligible SoFi members may be able to save on loan processing fees.
- Potentially save up to $500 on loan processing fees
- Membership benefits, including complimentary financial planning
- Highly rated mobile app
- Mortgage lending not available in every state
- No VA or FHA loans
- Must create an account to see refinance rates
Don’t Miss: SoFi Mortgage Review
Best for: Borrowers seeking a variety of refinancing options
Guaranteed Rate is one of the best cash-out refinance lenders and offers a wide range of refinance options, including VA and FHA cash-out refinancing. You can easily compare cash-out refinance options using its loan finder tool, and, unlike some lenders, it advertises current refinance rates on its website.
- Wide selection of home loan products
- Displays refinance rates online
- Digital application process
- Initial loan estimates don’t itemize origination fees unless you apply
- Loan finder tool isn’t prominently displayed on its website, and the website can be confusing to navigate
- No local branches for in-person support
Read: Guaranteed Rate Review
Best for: Borrowers seeking a lender that specializes in VA cash-out refinances
Veterans United is one of the best VA cash-out refinance lenders. The company boasts high customer satisfaction scores and offers 24/7 phone support. While it specializes in VA loans, it also offers other home loan products.
- 24/7 phone support
- Cash-out refinance rates available online
- Conventional and FHA loans also available
- Minimal information about non-VA loans on its website
- Branch locations only in select states
- Must submit an application to get personalized rate quotes
Also See: Veterans United Home Loan Review
Bank of America
Best for: Borrowers wanting to refinance through a national bank
If you prefer using one of the largest bank networks in the U.S., Bank of America can be a great option. The bank has approximately 4,200 branches and offers a number of different refinancing and home equity products. Bank of America Preferred Rewards members may also be eligible for origination fee reductions.
- Thousands of local branches
- Wide range of refinancing and home equity options
- Can complete the application process online or through a local branch
- Best loan offers may only be available to Preferred Rewards members
- Not every state has a local branch
- Need to apply to see personalized rates and fees
Keep Reading: Bank of America Review
Best for: Borrowers who want the flexibility of being able to refinance multiple times
loanDepot is one of the best cash-out refinance lenders, and it offers a great benefit to existing customers with its “Lifetime Guarantee.” If you’ve financed with loanDepot in the past, the company will waive its lender fees and reimburse your appraisal fee on your next refinance.
- Lifetime Guarantee waives lender fees and reimburses the appraisal fee on future refinances
- Ability to work with a dedicated loan agent
- Digital application process
- Must apply to see the current mortgage rates
- Doesn’t disclose fees online
- Limited information on current product lineup
Learn More: loanDepot Review
|Lender||Refinancing options||Min. credit score|
|Caliber Home Loans||620|
|SoFi||Does not disclose|
|Bank of America||Does not disclose|
|loanDepot||Does not disclose|
Cash-out refinance FAQs
How does a cash-out refinance work?
The cash-out refinance process is similar to your original purchase loan. You’ll go through a similar underwriting process, and your lender will require a new home appraisal to calculate the value of your home.
In general, most lenders will only allow you to borrow up to 80% of the home’s appraised value. For example, if your home appraises at $350,000, and you have a mortgage balance of $250,000, you’d be able to tap $30,000 in equity for a maximum cash-out refinance loan balance of $280,000 (80% of $350,000).
With a cash-out refinance, you pay off your current loan with a new, larger loan and pocket the difference in cash. Most lenders offer fixed-rate repayment terms of up to 30 years, but adjustable rates are available as well.
You can use the equity from a cash-out refinance to fund home improvements, pay off student loans, or cover any emergency expenses.
Cash-out refinance requirements
Typically, you’ll need to meet these requirements to qualify for a cash-out refinance:
- 620 credit score: Most lenders require a minimum credit score of 620 to qualify for a cash-out refinance. VA and FHA cash-out refinance loans tend to require similar scores.
- At least 20% home equity: Conventional cash-out refinances let you borrow up to 80% of your home’s appraised value. A VA cash-out refinance allows you to borrow up to 100% of your home value.
- Debt-to-income (DTI) ratio: When it comes to cash-out refinances, the lower your DTI ratio, the better. Applying with a ratio of 36% or less can help you qualify for the best rates. Any higher, and you may need to go through manual underwriting and/or have more cash reserves to qualify.
- Income and employment verification: You’ll need to submit your recent tax returns, W-2s, and pay stubs to verify your income and employment history.
- Home appraisal: Lenders require a property appraisal to verify your home’s value.
- Closing costs: You’ll have to pay an origination fee and closing costs just like you did with your purchase loan. You may be able to roll these costs into the loan.
Cash-out refinance vs. rate-and-term refinance
Both of these products replace your existing mortgage loan. This may result in a new interest rate, monthly payment, and loan term. However, the two products also have some distinct differences.
A cash-out refinance has these unique traits:
- Can tap home equity: You can borrow your home equity and receive it as a lump sum payment.
- Potentially higher monthly payment: Your new monthly payment might be higher than your current one since you’ll have a higher principal balance.
- Potentially higher interest rate: Cash-out refinance rates tend to have slightly higher interest rates than a no cash-out refinance.
A rate-and-term refinance contrasts from a cash-out refinance in the following ways:
- Cannot borrow equity: A traditional refinance doesn’t let you access your home equity. Some programs may allow you to withdraw a small amount to complete energy-efficient improvements.
- Only replaces interest rate and repayment terms: As the name suggests, you’re only changing your current interest rate and amortization period. Your principal balance will remain the same.
- Potentially lower minimum credit score: Lenders may accept a lower credit score since you’re not cashing out any equity. This is especially true for streamlined loans from the FHA, VA, or USDA.
Cash-out refinance vs. HELOC
A home equity line of credit (HELOC) also lets you utilize your home equity. But these loans work differently than cash-out refinances. Some of the most notable differences include:
- Borrow more equity: Some lenders may let you borrow up to 85% of your home’s value with a HELOC, but the maximum LTV allowed for a cash-out refinance tends to only be 80%.
- Can make multiple withdrawals: HELOCs give you a certain number of years to access your equity. This is known as the draw period. During the draw period, you can draw as much money as you need (up to the loan’s limit) as many times as you want.
- Potentially lower closing costs: You may pay fewer closing costs as your new loan is for a smaller amount. Some lenders may even waive your closing costs altogether.
- Stricter credit requirements: Lenders may require a higher credit score to open a HELOC instead of the standard 620 credit score for cash-out refinancing.
- Doesn’t refinance or replace your existing mortgage: A HELOC is a type of second mortgage — it doesn’t replace the rate and term of your current home loan. As a result, you’ll have two different interest rates, repayment schedules, and monthly payments.
- Variable interest rate: Most HELOCs carry a variable interest rate. This rate might be higher than your current mortgage rate and new cash-out refinance rates. In addition, your HELOC interest rate has the potential to go up in the future.
Credible’s best cash-out refinance lenders
You might be able to find the best cash-out refinance rates at these lenders:
- Rocket Mortgage — For borrowers who prefer a fully online application process
- Caliber Home Loans — For borrowers seeking local loan consultant access
- PenFed Credit Union — For borrowers wanting to refinance through a credit union
- SoFi — For borrowers wanting to refinance through an online bank
- Guaranteed Rate — For borrowers seeking a variety of refinancing options
- Veterans United — For borrowers seeking a lender that specializes in VA cash-out refinances
- Bank of America — For borrowers wanting to refinance through a national bank
- loanDepot — For borrowers who want the flexibility of being able to refinance multiple times
Credible compares nine categories to find the “best companies” for mortgage refinancing. These comparison categories include rates, fees, loan types, availability, different servicer, customer experience, mobile app, overall review score, and prequalification.
The ease of receiving a rate quote, lender transparency, and additional services are also factors.