{"@context":"https:\/\/schema.org\/","@type":"BlogPosting","@id":"https:\/\/www.getloans.com\/blog\/cash-out-refinance\/#BlogPosting","mainEntityOfPage":"https:\/\/www.getloans.com\/blog\/cash-out-refinance\/","headline":"Cash Out Refinance","name":"Cash Out Refinance","description":"Cash out refinancing, where you borrow above what you owe on your existing mortgage, is many times a better way to go than getting an equity line. Equity lines are usually adjustable rate mortgages based on Prime Rate, which is currently very low. But: Prime Rate -Prime Rate can spike with a lot of volatility. […]","datePublished":"2010-03-21","dateModified":"2023-11-15","author":{"@type":"Person","@id":"https:\/\/www.getloans.com\/blog\/author\/brianm\/#Person","name":"brianm","url":"https:\/\/www.getloans.com\/blog\/author\/brianm\/","identifier":2,"image":{"@type":"ImageObject","@id":"https:\/\/secure.gravatar.com\/avatar\/b03dd1a5c12d48f4023463adfa5dbd6d38ebf6f4d842bd8f8d55ec71cb0ca275?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/b03dd1a5c12d48f4023463adfa5dbd6d38ebf6f4d842bd8f8d55ec71cb0ca275?s=96&d=mm&r=g","height":96,"width":96}},"publisher":{"@type":"Person","name":"Brian Martucci","image":{"@type":"ImageObject","@id":"https:\/\/www.getloans.com\/wp-content\/uploads\/2026\/06\/brianmartucci-getloans-logo2017.webp","url":"https:\/\/www.getloans.com\/wp-content\/uploads\/2026\/06\/brianmartucci-getloans-logo2017.webp","width":400,"height":70}},"image":{"@type":"ImageObject","@id":"https:\/\/www.getloans.com\/wp-content\/uploads\/2012\/06\/stack-of-cash.jpg","url":"https:\/\/www.getloans.com\/wp-content\/uploads\/2012\/06\/stack-of-cash.jpg","height":1056,"width":1920},"url":"https:\/\/www.getloans.com\/blog\/cash-out-refinance\/","about":["Refinance"],"wordCount":343,"keywords":["cash out refi"],"articleBody":"Cash out refinancing, where you borrow above what you owe on your existing mortgage, is many times a better way to go than getting an equity line. Equity lines are usually adjustable rate mortgages based on Prime Rate, which is currently very low. But:Prime Rate-Prime Rate can spike with a lot of volatility.-Equity lines based on Prime Rate are “interest only”, so you are not paying down the principal. You may as well put your new kitchen or bathroom on a credit card, and never pay it off.Alternative to an equity lineSo if I can, I prefer to counsel people to do a cash out refinance of their entire mortgage.However, the problem is that loan-to-value’s have gotten stricter (i.e. lower), so a cash out refinance has gotten harder to get these days with appraisals seemingly flat to dropping (depending on the area).The current loan-to-values (LTV) are:-Conforming Loans, which go up to $417,000, you can still go to 80% LTV, but will get a little better rate at 75% LTV and lower.-Conforming-Jumbo loans, which go from $417,001 to $729,750 (in high cost areas) are limited to 60% LTV. This new category of loan was created by Congress to stimulate the purchase of homes, so the cashing out of homes has a very restrictive (i.e. low) LTV.-Jumbo loans, over $729,750, are usually limited to 75%, or less.-And on FHA loans you can borrow up to 85% LTV.-And to compare, most equity lines cap out at 80% LTV.Here is an example:Your house is worth $500,000 and you owe $300,000 on the current mortgage. On a new cash out refinance mortgage you can get up to 80% LTV since this would be a Conforming loan, or up to a $400,000 new loan amount, which yields you $100,000 cash out (less after you subtract closing costs). Or, you can leave the existing $300,000 loan in tact, and you can get a $100,000 equity line.So you can see how you really need a lot of equity before you can pull some equity out in a cash out refinance."}