Estimate the equity.
Your home's value minus what you owe is your equity. A cash-out refinance can reach part of it, never all of it. Program guidelines set how much must stay in the home.
Cash-Out Refinance
One new first mortgage. The cash comes out at closing.
A cash-out refinance replaces the mortgage you have with a bigger one and hands you the difference. One loan, one payment, one new rate on the whole balance.
The quick definition
What is a cash-out refinance?
A cash-out refinance pays off your current mortgage with a new, larger first mortgage. The difference, after payoff and closing costs, comes to you as cash at closing.
It is not a second loan. It is a replacement. The old mortgage goes away. The new one carries the old balance plus the cash you took, at a new rate, on a new term, with one monthly payment. Your home secures it, the way it secured the old one.
How it differs from a HELOC and a HELOAN: a Home Equity Line of Credit and a Home Equity Loan usually sit behind your first mortgage as a second lien and leave that first mortgage alone. A cash-out refinance replaces the first mortgage itself. That one difference drives almost every trade-off on this page.
How it works, step by step
Six steps from the mortgage you have to the cash in hand.
Official terms control every step. This is the general shape, not a promise of an amount, a rate or a timeline.
Choose the cash and the term.
The new loan is your current balance plus the cash you want plus any costs rolled in. You also pick the new term, commonly 30, 20 or 15 years.
Apply in the secure review.
Income, credit, the property and the payoff of the old loan are reviewed inside the secure Royal Mortgage experience, never on this public page.
The home is valued.
An appraisal or another accepted valuation sets the number the new loan-to-value is measured against. Your estimate here is only an estimate.
The old loan is paid off.
At closing, the new loan pays off the old mortgage first. Closing costs are paid or rolled in. Any liens that must be cleared are cleared.
The cash comes to you.
What is left after payoff and costs is disbursed to you, usually after any rescission period the law provides on a primary residence. Then one new payment begins.
The whole balance moves: the new rate applies to the money you already owed, not only to the cash you take. If the rate you have today is much lower, read the next section before anything else.
Fit
When cash-out makes sense, and when it does not.
The answer usually comes down to the rate you have, the size of the need, and how long you will need the money.
One loan, one payment, one plan.
- Consolidating a large fixed cost into a single first-mortgage payment instead of stacking a second loan on top.
- A rate context where a new first mortgage is reasonable, such as when the rate on your current loan is close to or above what a new loan would carry.
- A large project or expense that is easier to carry over a long term at a first-mortgage structure than over a shorter second-lien term.
- A wish to reset the loan on your own terms, such as moving from an adjustable loan to a fixed one while taking cash at the same time.
Do not give up a rate you love.
- The rate you have is much lower than today's. Refinancing moves your whole balance to the new rate. A second mortgage leaves that low rate alone. Look at a Home Equity Line or a Home Equity Loan first.
- The need is short-lived. Closing costs on a whole new first mortgage are hard to justify for money you will repay in months. A bridge loan or a line may fit better.
- You are close to selling. A new 30-year loan you will pay off next year rarely earns back its costs.
- The cash would leave too little equity. Program guidelines keep a cushion in the home, and thin equity can bring mortgage insurance back.
Read more than the monthly payment
A lower payment can still be a more expensive loan.
Six numbers deserve a look before the payment does. The calculator below shows most of them side by side.
Thirty years starts over.
If you are ten years into a 30-year loan and refinance into a new 30, the clock restarts. A lower monthly payment stretched over more years can mean more total interest.
Costs are on the whole new loan.
Title, appraisal, recording and lender costs are priced against the full new balance, not only the cash you take. Rolling them in means paying interest on them too.
Every dollar moves to the new rate.
This is the main trade-off. The rate on your old balance is gone. Compare the new rate against the one you have before you compare payments.
Thresholds still apply.
Borrowing past a program's loan-to-value threshold can add mortgage insurance to the new payment. Guidelines set the line; the calculator shows your new loan-to-value so you can see where you land.
Some has to stay in the home.
Program guidelines set a maximum loan-to-value for cash-out. What stays behind is your cushion against a softer market and your room to move later.
Taxes and insurance ride along.
Principal and interest is the number calculators show. Property taxes, homeowners insurance and any mortgage insurance are added on top in the real payment.
The cash-out calculator
Run a cash-out scenario with your own numbers.
Hypothetical and on-device. The 9% rate is a starting point you can move, not a Royal Mortgage rate. Nothing you enter is saved or sent. A Home Equity Loan for the same cash at the same rate sits beside the refinance so you can see both shapes at once.
Compare the three ways
Three ways to reach the same equity.
Same house, same equity, three different shapes. The shape is the decision.
A line you draw on as needs arise.
- Sits behind your first mortgage
- Revolving limit, draw as needed
- Commonly a variable rate
- Your first-mortgage rate stays
One lump sum, one fixed schedule.
- Sits behind your first mortgage
- One defined amount
- Usually a fixed rate and payment
- Your first-mortgage rate stays
One new first mortgage with cash at closing.
- Replaces your first mortgage
- Old balance plus cash, one payment
- Usually a fixed rate on the whole balance
- Your old rate is gone
Frequently asked questions
The questions worth asking before you replace a mortgage.
Does Royal do cash-out refinances in Florida?
Royal Mortgage LLC is a correspondent lender licensed in Florida, and cash-out refinancing is part of what a Royal review can look at. Every program is subject to credit approval and program guidelines. A licensed loan officer confirms what fits your situation inside the secure review. This page cannot tell you whether you qualify.
Will I lose my current rate?
Yes. A cash-out refinance pays off your current mortgage, so its rate goes with it. The whole new balance, the old amount plus the cash, moves to the new rate. That is the main trade-off. If your current rate is much lower than today's, a Home Equity Line or Home Equity Loan leaves that rate alone and may be the better fit.
How much cash can I take out?
Program guidelines set a maximum loan-to-value for cash-out, so some equity always stays in the home. Your new loan-to-value, your credit, your income and the property all play a part. The calculator shows the loan-to-value your scenario would create; the secure review confirms what is actually available.
Is a cash-out refinance a second mortgage?
No. A second mortgage, such as a HELOC or a Home Equity Loan, is added behind your first mortgage. A cash-out refinance replaces the first mortgage with a new, larger one. There is still one loan on the home when it is done.
What does it cost to close?
A cash-out refinance carries closing costs on the whole new loan, commonly title, appraisal, recording and lender charges. They can be paid at closing or rolled into the balance. Rolling them in means you pay interest on them over the term. Actual costs come only in official disclosures.
Does the term have to start over?
No, but it often does. You choose the new term. A new 30-year loan restarts the clock; a 20- or 15-year loan keeps more of your progress but usually raises the monthly payment. The calculator lets you try all three.
Ask Royal AI
Ask it the way you would say it.
Known home-equity questions open the right destination. Your question is never placed in a handoff URL.
Secure next step
Ready for an official cash-out review?
For your security, your official review, application, credit authorization and financial documents are handled inside the secure Royal Mortgage experience. Or open the ROYAL Ai app and tap ROYAL FASTPASS.
- This public page does not collect Social Security numbers, dates of birth, income documents, bank information or credit authorization.
- Your scenario stays on this device and is not attached to any link.
- Opening the secure destination neither starts an application nor indicates an approval decision. Any program is subject to credit approval and program guidelines.
General educational sources
Reviewed foundations, not current program terms.
General explanations use Royal content and official consumer guidance. Rates, APRs, loan-to-value limits, closing costs, mortgage insurance rules, eligibility thresholds and actual terms are confirmed only in a secure licensed review.
- Consumer Financial Protection Bureau: Owning a Home, the CFPB's guidance on mortgages and refinancing.
- Royal HELOC: How it works, Royal public education.
- Royal HELOC calculators, the HELOC, HELOAN and refinance side by side.