Cash-out refinance
A refinance where the new loan is bigger than the old one, and the borrower takes the difference in cash. Used to pull equity out of the home.
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Where this comes up: getting ready
Part 1 of 4
Why a seller cares
A recent cash-out refinance means a bigger payoff at closing and less equity to walk away with. It also matters if you are thinking of pulling equity instead of selling.
Part 2 of 4
A simple example
Two years ago you refinanced a $180,000 balance into $230,000 and took $50,000 out. Your payoff at closing is now near $226,000, not $176,000.
| The situation | What it does to your sale |
|---|---|
| A cash-out refinance last year | A larger payoff and smaller proceeds |
| Considering one instead of selling | Keeps the home; costs a new loan at today's rate |
| Taking cash out right before listing | Some lenders and title companies look closely at a sale within months of a refinance |
Cash taken out earlier is proceeds you will not see at closing.
Part 3 of 4
What people get wrong
That a refinance resets the clock only on the rate. It resets the balance too, and the balance is what your payoff comes from.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
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