Home equity
Cash-out refinance
A refinance for more than you owe, taking the difference in cash from your home's equity — replacing your entire first mortgage in the process.
What does cash-out refinance mean?
A cash-out refinance pays off your existing mortgage and replaces it with a larger one, handing you the difference in cash from your equity. It can consolidate debt or fund a big expense, but it comes with a major caveat in today's market: it resets your whole first mortgage to the current rate. For the many Michigan owners holding a sub-5% first mortgage, that trade is expensive — a fixed home equity loan or HELOC usually wins because it leaves the low first-mortgage rate untouched while still accessing equity.
Common questions
How does a cash-out refinance work?
It replaces your mortgage with a larger one and hands you the difference in cash from your equity — but resets your whole first mortgage to today's rate.
Cash-out refinance or home equity loan?
If your first-mortgage rate is low, a home equity loan or HELOC usually wins — it leaves the low rate alone while still tapping equity.
How much can I cash out?
Typically down to 80% loan-to-value on a conventional cash-out, so you keep at least 20% equity. VA offers higher limits for eligible veterans.
Related terms