It’s an ideal time to cash-out refinance

In the second quarter of 2021, American homeowners were sitting on a record $9.2 trillion of tappable home equity. That translates to about $153,000 in equity for the average homeowner.

So it’s no wonder the number of cash-out refinances just hit a 15-year high.

If you’re considering a cash-out refi, you’ll want to find the lowest rate possible so that your cash-back isn’t eaten away by interest payments.

But which lenders have the best cash-out refinance rates?

Find your lowest cash-out refinance rate. Start here (Oct 3rd, 2021)

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Who has the best cash-out refinance rates?

We scoured a federal government database to identify the lenders with the best cash-out refinance rates.1 On average, the five lenders with the lowest 30-year cash-out refi rates were:

  1. Amerisave 
  2. Wyndham Capital
  3. Veterans United 
  4. First Republic Bank
  5. Zillow Home Loans 
  6. North American Savings Bank
  7. Navy Federal Crediut Union
  8. Gateway Mortgage Group
  9. Movement Mortgage
  10. Freedom Mortgage

These numbers are from 2020 (the most recent data available). But they can give you an idea of which lenders are likely competitive now.

Of course, the best lender on average won’t necessarily be your best. So you shouldn’t just look at the top rankings and stop there.

You’ll want to do a little research on your own to find the best interest rate and maximize your savings.

How to find your best cash-out refi rate

Let’s start with the obvious. You don’t just want the lowest rate. You want the best overall deal you can get.

And that means looking at closing costs as well as mortgage interest rates.

How to evaluate cash-out refi costs

For example, Amerisave, which has the lowest rate in our study, charges higher closing costs. Indeed, its median loan costs in 2020 for a cash-out refinance were $4,670. That compares with just $1,630 for Wyndham Capital.

Whether you prefer your rate or costs to be lower will depend on your personal circumstances.

If you can afford more cash upfront, you might opt for the lowest rate in order to save more long-term. But, if you need every cent you can get, then low loan costs will be your priority.

Yes, everyone can roll up their closing costs into their new loan. But if you want more cash back, the sum you walk away with will be reduced by the amount due on loan costs.

Shop around for you lowest cash-out refi rate

Different lenders specialize in different borrower profiles. So, if your credit score’s a bit iffy, your existing debt is high, or you’re cashing out every last dollar possible, some lenders won’t touch you. However, other lenders specialize in borrowers just like you.

And it can work the other way around. Because someone with perfect personal finances might not get as good a deal from a lender that’s used to working with less qualified applicants.

So make sure you shop around and compare personalized cash-out refi quotes from at least 3-5 lenders. That’s the only way to find the real best deal for your situation.

Get started shopping for cash-out refinance rates (Oct 3rd, 2021)

Cash-out refinance lenders, ranked

We looked at 50 of the biggest U.S. mortgage lenders to find the 25 with the lowest cash-out refinance rates.

Remember that these rates are averages. Some borrowers will get higher rates, and some lower. Your own mortgage interest rate depends on factors like your credit score, home value, and how much equity you’re cashing out.

Mortgage Lender Average 30-Year Cash-Out Refinance Rate1
AmeriSave 2.99%
Wyndham Capital 3.10%
Veterans United (Mortgage Research Center) 3.11%
First Republic Bank 3.11%
Zillow Home Loans 3.12%
North American Savings Bank (NASB) 3.15%
Navy Federal 3.20%
Gateway Mortgage Group 3.21%
Movement Mortgage 3.25%
Freedom Mortgage 3.28%
American Financial Network, Inc. 3.29%
NBKC 3.30%
CrossCountry Mortgage 3.31%
Homepoint 3.32%
Paramount Residential Mortgage Group, Inc. 3.33%
Guild Mortgage Co. 3.34%
Primary Residential Mortgage, Inc. 3.35%
New American Funding 3.37%
American Pacific 3.37%
Finance of America 3.38%
Quicken Loans 3.39%
Bay Equity LLC 3.39%
loanDepot 3.40%
Academy Mortgage Corp. 3.40%
Sofi 3.40%

That’s quite a spread. And it may reflect how comfortable these lenders are with different borrower profiles — and with cash-out refinances themselves.

Find your lowest cash-out refinance rate. Start here (Oct 3rd, 2021)

What affects cash-out refinance rates?

If you’re refinancing, you’ve already been through the mortgage application process. So you’ll know the things lenders look at when deciding how much to lend you and at what mortgage rate.

However, lenders generally see cash-out loans as a little riskier than an ordinary home loan or refinance. So rates tend to be a little higher for these loans. And eligibility requirements may be a bit stricter.

Here are some of the biggest factors that will impact your cash-out refinance loan rate:

  • Credit score — You typically need a credit score of at least 620 for a cash-out refi. Some lenders require a higher FICO score. In any case, the better your credit is, the lower your rate wil be
  • Cash-out amount — The more cash you withdraw from your available equity, the higher rate you’re likely to see on your new loan
  • Debt-to-income ratio (DTI) — The less you owe in existing debts, the lower your refinance rate is likely to be
  • Loan-to-value ratio (LTV) — With a cash-out refinance, lenders typically require you to retain 20% of your home’s equity. But the more equity you leave in place beyond that, the lower the refinance rate you stand to get
  • Current mortgage rate market — Are general mortgage rates high or low when you read this? You can find out here. But remember, rates for cash-out refinances tend to be 0.125% to 0.25% higher than rates rate-and-term (no-cash-out) refinances
  • Lender — The lender you choose can make a huge difference to the rate you pay. And you can save several thousand dollars by comparison shopping across several lenders

Nobody expects miracles. And you can only do so much in the months leading up to your mortgage application. But any improvements to your financial situation could get you closer to the best cash-out refinance rates. And everyone can comparison shop for lenders.

Cash out refinance closing costs

We’ve already mentioned closing costs. For a cash-out refinance, they’re similar to those you pay for any mortgage: typically between 2% and 5% of the loan amount.

As detailed in this article, refinance closing costs typically include:

  • Loan origination fee — 1-1.5% of the loan amount
  • Discount points (optional) — 0-1% of loan amount or more
  • Application fee — $75-$300
  • Credit check fee — $25
  • Home appraisal fee — $500-$1,000+
  • Title search and title insurance — $300-$2,000+
  • Survey fee — $150-$400
  • Attorney fees — $500-$1,000
  • Recording fees — $25-$250 (depending on location)
  • Processing and/or underwriting fee — $300-$900 each
  • Prepaid taxes and homeowners insurance — varies

Of course, you don’t always have to pay those costs out of pocket. Many borrowers simply add them to the balance on their new mortgage.

The upside of doing this is that you’re spreading those costs over the term of your mortgage. And you probably won’t even notice the extra on your mortgage payment each month.

But you should be aware of the downside. Because you’ll be paying interest on those costs, perhaps for 30 years. So it’s not a cheap alternative. And, if you can afford to pay them yourself, you’ll save in the long run.

Who has the lowest cash-out refi closing costs?

The same cash-out refinance data for 2020 covers closing costs as well as mortgage rates. So we’ve listed the 25 lowest:

Mortgage Lender Average Cash-Out Loan Costs, 2020
(as % of Average Loan Amount)
Example: Upfront Costs for
$250,000 Mortgage
First Republic Bank 0.33% $824
Wyndham Capital 0.45% $1,128
NBKC 0.63% $1,564
Citibank 0.66% $1,638
North American Savings Bank (NASB) 0.78% $1,954
Chase 0.90% $2,239
Guaranteed Rate 0.94% $2,346
Zillow Home Loans 1.01% $2,535
Bank of America 1.04% $2,612
Wells Fargo 1.08% $2,705
Ally 1.11% $2,786
Prosperity Home Mortgage, LLC 1.11% $2,787
Sofi 1.12% $2,801
US Bank 1.13% $2,815
LendUS LLC 1.13% $2,824
American Pacific 1.15% $2,885
Better Mortgage 1.17% $2,916
Finance of America 1.20% $3,003
Flagstar Bank 1.21% $3,033
Homepoint 1.23% $3,087
Gateway Mortgage Group 1.26% $3,141
PNC 1.26% $3,151
Northpointe Bank 1.32% $3,303
Movement Mortgage 1.32% $3,305
Bay Equity LLC 1.35% $3,382

Again, that’s a very wide spread. And when you view rates and costs side by side you can see the need to shop around between several lenders.

When you request a quote from a lender, you’ll receive a standardized document (a “Loan Estimate“) that makes it easy to compare loan offers. In particular, look out for information such as your annual percentage rate (APR) and the amount you’ll pay down over the first five years of the loan.

How to choose the best cash-out refinance lender for you

Remember what we said earlier: The best cash-out mortgage is as unique as you are. The choice will largely depend on your financial goals, your creditworthiness, and your existing mortgage.

So by all means try the lenders that had the best cash-out refinance rates overall. One of them may turn out to be best for you. But cast your net wide. Because you may well be surprised by which lender offers you your perfect deal.

Get started shopping for cash-out refinance rates (Oct 3rd, 2021)

Cash-out refinance rates FAQ

Does cash-out refinancing have higher interest rates?

Yes, normally. Expect your rate to be about 0.125-0.25% higher than the standard refi rates you’d qualify for. This is because lenders know that cash-out refinance loans fail more often than other ones. That means they’re higher-risk mortgages and have higher interest rates across the board.

Which lender has the lowest cash-out refi rates?

On our list, AmeriSave had the best cash-out refinance rates in 2020. But that doesn’t necessarily mean it will provide you with the best deal you can get. Because our data are about averages and you’re not average. So shop around between several lenders. That’s the best way to find your personal optimum rate and costs.

What’s the most cash back you can get on a refinance?

In the second quarter of 2020, the average mortgage holder had $153,000 in tappable equity, according to Black Knight. But your own tappable equity will depend on your mortgage balance and the fair market value of your home. Most lenders want you to retain 20 percent of your equity. So your total mortgage borrowing can’t exceed 80 percent of your home’s value. And you can borrow the difference between that 80 percent and your current mortgage balance, minus closing costs.

What’s the minimum credit score for a cash-out refinance?

You’ll likely get an ultra-low rate if your credit score is 740 or better. You should also have a clean credit history and credit report. You may be able to get a cash-out refinance with a score in the 620-640 range — or even 600 for an FHA loan. Unfortunately, the lower your score, the higher the rate you’re likely to pay.

Do you pay closing costs on a cash-out refinance?

Yes. And they vary a lot, often between 2 and 5 percent of the new loan amount. But you can often roll the upfront fees inton your new loan. So you don’t have to pay them out of pocket.

Will a cash-out refinance change my monthly payments?

Your monthly mortgage payments will likely increase after a cash-out refinance. That’s because the new loan amount is bigger than your existing loan amount.

What can I use a cash-out refinance for?

There are no rules about how you can use the funds received from a cash-out refinance. Popular uses for cash-out refinancing include paying for home improvements or renovations, paying off high-interest debt like credit cards or personal loans, and investing in a business or college tuition.

Does FHA allow cash-out refinancing?

Yes. In fact, only USDA loans don’t allow cash-out refinances. However, the FHA insists you retain 80 percent of your equity. And, if you have that much, you can usually refinance to a conventional loan, which means you’ll never pay mortgage insurance again. Typically, only those with credit scores in the 600-640 range need an FHA cash-out refinance.

Does VA allow cash-out refinancing? 

Yes! And it’s the best sort of cash-out refinancing. Because many lenders allow you to refinance up to 100 percent of your property value with a VA loan — which means you can take all your available equity as cash back.

Can you cash-out refinance a jumbo loan?

Yep. But you’ll need a higher credit score (likely in the 700s) and lots of home equity built up in the property.

Should I use a cash-out refinance or a home equity loan?

A cash-out refinance is typically the best choice if you want to tap home equity while also changing the rate or loan term on your current mortgage. If you want to leave your current loan in place, you might consider a second mortgage instead. Second mortgage loan options include a fixed-rate home equity loan or variable-rate home equity line of credit (HELOC).

How can I get a lower interest rate on my cash-out refi?

The main way to get a lower interest rate is to shop around among a few different lenders and choose the best deal. You can also reduce your rate by improving your credit score, paying down existing debts, and limiting your cash-back amount. Borrow only as much money from your home equity as you really need.

Verify your new rate (Oct 3rd, 2021)

1Rates and fees shown reflect self-reported data lenders are required to file each year under the Home Mortgage Disclosure Act (HMDA). These numbers are average only and do not reflect the interest rate or fees you will be offered.

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