What Is a Cash-Out Refinance?

Short answer

A cash-out refinance replaces your existing mortgage with a new, larger loan and gives you the difference in cash at closing, less closing costs. If you owe $300,000 on a home worth $600,000 and refinance into a $450,000 loan, you walk away with roughly $150,000 before costs. Fannie Mae requires at least one borrower to have been on title for six months before the new loan funds, with exceptions for inheritance and delayed financing (as of October 2026).

Definition

A cash-out refinance converts home equity into cash by borrowing more than you currently owe. The new loan pays off the old one, pays closing costs, and the remainder is wired to you. Lenders cap the new loan at a maximum LTV that is lower than for a purchase.

Worked example

Home in Miami Lakes appraised at $700,000, current balance $320,000. The lender allows 80% LTV on a primary-home cash-out: 0.80 x $700,000 = $560,000 maximum new loan. Payoff $320,000. Closing costs, including Florida doc stamps $560,000 x 0.0035 = $1,960 and intangible tax $560,000 x 0.002 = $1,120, plus title, appraisal and lender fees of about $5,000, total about $8,080. Cash to borrower = $560,000 - $320,000 - $8,080 = about $231,920. The new payment is on $560,000 at today's rate, which may be higher than the old rate; rates vary daily.

Rules to know

• Seasoning: Fannie Mae requires six months on title before disbursement, with exceptions for inherited property and delayed financing (Fannie Mae Selling Guide B2-1.3-03, as of October 2026). Other programs set their own rules.
• Maximum LTV: lower than purchase LTVs, and lower again for second homes, investment properties and condos.
• Pricing: cash-out loans carry risk-based price adjustments. Rates vary daily; call for today's pricing.
• Taxes: Florida doc stamps and intangible tax apply to the full new loan amount.

Cash-out vs HELOC vs second mortgage

If your current first mortgage has a low rate, keep it and add a HELOC or fixed second mortgage; you pay Florida taxes only on the second lien amount. If your current rate is high or you want one payment, a full cash-out refinance can make sense. We run both side by side. See refinance.

In South Florida

South Florida homeowners have built large equity since 2020, and cash-out is how many fund a condo special assessment, a new roof and impact windows (which also lower insurance), a down payment on an investment property, or a business. Two local costs to weigh: doc stamps and intangible tax are charged on the entire new loan, not just the cash portion, and if your current rate is much lower than today's, a HELOC or fixed second mortgage may cost less than refinancing the whole balance. Investors often use DSCR cash-out loans on rental condos and closed in an LLC.