Best Cash-Out Refinance Lenders of April 2025

If you’re looking to borrow money and you have equity in your home, a cash-out refinance may be a good borrowing option for you. When you use a cash-out refinance, you take out a new mortgage for more than your current loan. You get to keep the difference, which you can use for virtually any purpose.

Before you choose this lending option, it’s important to understand how cash-out refinances work, their advantages and disadvantages, and what some of the best cash-out refinance lenders are.

What is a cash-out refinance?

As you pay down your mortgage balance, you build equity in your home. If you have a large purchase or other financial goal, you can tap the equity in your home to cover the expense. For example, many homeowners use the equity in their home to pay off credit cards, consolidate loans, or make home improvements.

Unlike other types of loans, a cash-out refinance also pays off your existing loan, giving you a new interest rate and payoff term. This can be helpful if you want different loan terms, such as a lower interest rate or you want to exchange an adjustable-rate mortgage for a fixed-rate home loan.

Here are some typical eligibility requirements:

• Credit score: Lenders use your credit score to assess how likely it is that you’ll repay the loan. Most lenders require a score of 620 or better.
• Debt-to-income ratio (DTI): This describes how much of your pre-tax monthly income goes toward debt payments. Lenders want to be sure you aren’t taking on too much debt, so they often set a maximum of 45% DTI.
• Loan-to-value ratio (LTV): You should still keep some stake in the property, so you often can’t borrow up to the total value of the home. Many lenders allow a maximum of 80% LTV, though some may have higher limits.

Pros and cons of a cash-out refinance

If you’re looking for a way to borrow extra funds and replace your existing mortgage, a cash-out refinance can help you do both. However, before you decide on this loan, consider some of the benefits and drawbacks:  
 

You also should keep your interest rate in mind if you’re looking to replace your home loan. Financial experts recommend refinancing if you can lower your interest rate by a percentage point or two, which can be tricky in the current environment. Interest rates have been above 6.5% since the beginning of the year, but 82% of outstanding mortgages have an interest rate below 6% according to the National Mortgage Database.

Cash-out refinance vs. HELOC

If you’re considering borrowing against the equity in your home, you may be looking into other options, like a home equity line of credit (HELOC). Both can be good choices, but the one that’s right for you depends on a variety of factors.

Cash-out refinance

A cash-out refinance pays off your current mortgage and replaces it with a new loan with different terms. You receive the funds as a lump sum that you repay in monthly installments. Your loan may have either a fixed rate or an adjustable rate. You can generally borrow up to 80% of your home’s value, but this can vary by lender.

A cash-out refinance may be appealing because this can give you access to funds for a large purchase, and you may be able to score a lower interest rate. If you use the funds from a cash-out refinance to make home improvements, you may even qualify for a tax break. You can also use a cash-out refinance on a paid-off home, which allows you to borrow money when you no longer have a mortgage.

While a cash-out refinance has benefits, it also has drawbacks.

“This option alleviates the need to liquidate the property to access the equity,” says Tim Melia, principal and financial planner at Embolden Financial Planning LLC. “The downsides are the potential for a higher interest rate with the new mortgage, and because cash is being extracted, the principal will increase. Therefore, payments are going to be higher. Taking equity out of real estate increases the potential for fees, default, and loss of the property if the mortgage is not paid.”

HELOC

HELOCs also make it possible to take advantage of the equity you’ve built in your home, but instead of receiving a lump sum of cash, you’re given access to a line of credit. You can borrow money when you need it (up to a limit) during the draw period, which is typically 10 years, and you only pay interest on the amount of money you borrow. Then, after the draw period ends, you begin repaying the balance.

With a HELOC, there may be an annual fee to keep the line of credit open. It’s also essential to consider the interest rates.

“The interest rates [on a HELOC] may be higher than a longer-term mortgage,” Melia says. “The payback is also likely going to be quicker than a cash-out refinance that may spread the repayment over a longer period.”

Which is right for you?

When it comes to which option is the “better” choice, Melia says this depends on the borrower.

“A cash-out refinance for a known purchase need may be attractive based on available interest rates,” Melia says. “If you like the idea of having a line of credit, perhaps for use in case of emergency, a HELOC might make more sense.”

No matter which type of lending product you decide to apply for, it helps to get your credit in good shape first. Having a higher credit score will help you qualify for the best rates. Along with saving you money, lower rates can help you pay off your loan faster.

Best cash-out refinance lenders of April 2025

If you’re looking for a cash-out refinance loan, you have many options. Here are our current top picks:

• Allied Mortgage Group: This lender offers both cash-out refinance and rate-and-term refinance options, and it states that it can close some mortgages in as little as 15 days.
• NBKC Bank: Based in Kansas City, Mo., NBKC Bank offers customer service via phone, email, and online chat. The lender also has a few local branches you can visit if you live in Kansas or Missouri, making it a great choice if you prefer a more personalized experience.
• Rocket Mortgage: This lender is best for borrowers who would prefer to roll closing costs into their new loan.
• Newrez: If you prefer a more personalized experience, Newrez, formerly Caliber Home Loans, may be right for you. The lender has many branch locations where you can speak with a local loan consultant.
• PenFed Credit Union: If you’d rather work with a credit union, PenFed is a great option. While you have to be a member to get a loan, all you need to do is open an account with a minimum of $5 to join the credit union.
• SoFi: If you’re a member of SoFi, you may be able to save up to $500 on loan processing fees.
• Rate: If you value transparency, Rate, formerly Guaranteed Rate, may be a solid option. The lender publishes its mortgage rates on its website.
• Veterans United: This is the best option if you’re interested in a lender that specializes in Veterans Affairs (VA) cash-out refinances.
• Bank of America: If you’re interested in looking at options beyond a cash-out refinance, Bank of America offers a wide variety of refinance loans. The lender also has branches nationwide.
• LoanDepot: Because LoanDepot is a direct lender, it can provide competitive refinance rates and a fast refinancing process.

Alternatives to a cash-out refinance

There are other ways to access extra funds if you don’t want to refinance your mortgage, including:

• Personal loan: Personal loans usually have fixed interest rates and set repayment terms, giving you upfront funds you can use for projects or debt consolidation. These loans don’t typically require collateral, but you might need to provide the lender with a description of what you’re using the funds for. For example, some lenders might approve a loan for home improvement costs or emergency expenses, but they might not allow you to use loan money on investments or student loan debt.
• Home equity loan: While a HELOC is a revolving line of credit that you can borrow from (or not) during a set time, a home equity loan lets you borrow a lump sum and repay in installments. A home equity loan also uses your home as collateral, acting as a second mortgage. Unlike a HELOC, this type of loan typically has a fixed interest rate. 
• 401(k) loan: You can borrow funds from your workplace savings account. If your employer allows it, you may be able to borrow up to $50,000 or 50% of your vested balance, whichever is less. You won’t have to pay taxes or penalties on the money since it’s a loan, not a disbursement, but you will need to pay it back plus interest within five years. Financial experts advise against borrowing from your retirement for less-crucial expenses (like a vacation), but it can be useful if you want to pay off high-interest debt, like credit cards. 

Methodology

Credible evaluated loan and lender data points in seven categories to identify the “best companies” for a mortgage refinance. These categories included interest rates, fees, availability of repayment terms and discounts, eligibility requirements, minimum down payment, and the level of customer service provided. Because every lender has its own system for evaluating borrowers, the best loan or lender will depend on an individual's unique circumstances, the loan features that are most important to them, and the interest rate and terms they qualify for.

Josh Patoka has contributed to the reporting of this article.