Record-high home values are bad news for homebuyers trying to enter the market — but great for existing homeowners, who got an average $64,000 equity raise in the first quarter on 2022 without lifting a finger, according to the most recent Homeowner Equity Insights report by housing data firm CoreLogic
More equity, coupled with today’s low mortgage rates, creates access to cheaper-than-usual borrowed funds through a cash-out refinance. A cash-out refinance is when you take on a new mortgage higher than what your balance is, and take a check for the difference. The new loan is refinanced with a new interest rate. Cash-out refinances are gaining in popularity — increasing from 37% to 49% of total refinances in the first half of 2021, according to property data analytics firm Black Knight.
A cash-out refinance can be a useful financial tool to consolidate high interest debt or fund a home improvement project.
To make sure you’re getting the best deal possible, you’ll want to choose the best cash-out refinance lender for your specific situation. Two similarly qualified refinance candidates can see a difference of 0.5% between mortgage rates with different lenders, according to the Consumer Financial Protections Bureau (CFPB) — a difference that can add up thousands of dollars over the life of a loan. That’s why it’s imperative you shop and compare a few lenders before committing.
Outside of getting the best cash-out refinance rate, it’s equally important to find a lender with transparent pricing, online conveniences, accessibility to most borrowers, an extensive product offering, and a reputable history with customer satisfaction.
To help you navigate the process, NextAdvisor reviewed 51 different lenders and scored each one on categories including transparency, accessibility, online convenience, loan product variety, and customer satisfaction.
We then narrowed down the list to the top 10 best best cash-out refinance lenders.
As with all of our mortgage lender reviews, our analysis is not influenced by any partnerships or advertising relationships. For more information about our scoring methodology, click here.
10 Best Cash-Out Refinance Lenders of
- Guaranteed Rate’s Standout Feature::Guaranteed Rate says it can provide a preapproval letter in around 15 minutes, and the company goal is to be clear to close within 10 days.
- More than 400 branch locations nationwide
- Operates in all 50 states and Washington, D.C.
- Fully online mortgage application process
- Detailed advertised rates for many of its loan products
- Online preapproval 15 minutes
- Fast closings
- Lenders fees not available online
- Some loan types are brokered off to other lenders
Guaranteed Rate is a Chicago-headquartered firm with a strong online presence and 400 branch locations across the country. We ranked the company a top lender because of its top-of-the-line digital experience, helpful consumer tools, solid customer service, and variety of loan products, including all three government loans.
Guaranteed rate received fewer consumer complaints compared to most other lenders we reviewed. The company logged less than one complaint per 1,000 loans originated with the Consumer Financial Protection Bureau (CFPB) consumer complaint database, the agency responsible for collecting, monitoring, and responding to U.S. consumer complaints about financial services and products.
- Navy Federal Credit Union Standout Feature:Offers a unique relock rate option: You can lock in your interest rate and relock it twice if rates improve before closing.
- Specializes in providing services and advice to the military community
- Offers no-down-payment mortgages
- Has flexible credit requirements
- Doesn’t charge private mortgage insurance
- You can lock in your interest rate and relock it twice if rates improve
- Membership is limited to service members, veterans, and certain government contractors
- Doesn’t offer FHA loans and USDA loans
- You’ll have to request a customized rate quote
Headquartered in Vienna, Virginia, Navy Federal Credit Union serves all 50 states and has 344 branches worldwide. Navy Federal Credit Union was a high-scoring lender by NextAdvisor because of its price transparency, streamlined online application process, and loan product variety. It has a slightly above average complaint ratio of 2.8 complaints per 1,000 loans with the CFPB. But this lender offers no-down payment and flexible credit requirements on most mortgage products to qualified military service members and their families.
- Rocket Mortgage’s Standout Feature:Despite its magnitude, the company has lower-than-average consumer complaints registered on the CFPB consumer complaint database.
- Quick and easy preapproval process
- Entirely remote application and approval process
- Lends in 50 states
- Wide range of loan options
- Strong customer service reputation
- No physical locations
- You’ll need to call or chat with a representative for some loan information
- No construction loans or renovation loans
- Advertised rates may include discount points, which increase your upfront costs
- Difficult to find mortgage menu of loans
Rocket mortgage is the online lender for Quicken Loans and is one of the largest mortgage lenders in the U.S. We ranked the Detroit-based company as one of the best mortgage lenders because of its simple online application process, low level of consumer complaints, the transparency and accessibility of its rates and fees, and the company’s wide offering of mortgage loan products.
Rocket Mortgage stands out for the company’s high level of customer satisfaction. Rocket Mortgage originated over one million loans in 2020, making it the largest lender we reviewed by total volume. We found 0.48 complaints per 1,000 loans — or less than half a complaint per 1,000 loans occurred. This figure is very low compared to the average complaint ratio of 2 complaints per 1,000 loans among other lenders we reviewed.
- Veterans United Standout Feature:Veterans United provides a wealth of information on its website regarding what to expect through the loan process, closing, how to prepare for homeownership, home loans basics, credit, and underwriting.
- Mortgage loans available in all 50 states
- Educational content available through the company’s website
- Highly experienced in VA loans as a top three VA loan originator for five consecutive years
- Low number of consumer complaints with the CFPB
- Offers a number of loan programs including VA, jumbo, conventional, FHA, and USDA
- Full online application process
- Limited online rate information; must call to see other rate options such as discount points
- Difficult to find information regarding non-VA loan options
- Does not offer home equity loans or lines of credit
Veterans United Home Loans, headquartered in Missouri, is a mortgage lender that specializes in VA home loans in all 50 states. Veterans United is incredibly active in the VA loan space. The U.S. the Department of Veterans Affairs has listed Veterans United in the top three among VA loan lenders by volume for five consecutive years. While the company focuses heavily on VA loans, it also offers conventional, jumbo, FHA, and USDA loans.
Veterans United has a fully digitized and easy online application process. Compared to other lenders we’ve reviewed, the company had one of the lowest complaint ratios logged with the CFPB: less than half of one complaint per 1,000 loans originated.
- NASB’s Standout Feature:NASB has several programs that can help non-traditional borrowers get a home such as the self-employed and those with a less-than-prefect credit history.
- Lends in 50 states
- Has unique loans products for borrowers with credit issues or are self-employed
- Advertises daily interest rates for purchase and refinance loans
- Can get lower rate if rate drops during 90-day rate lock period
- Streamlined online application process
- Can get customized rate quote without hard credit check
- 12 in-person branches, but only in Missouri
- Does not offer USDA loans, construction loans, renovation loans, and home equity products
- Higher credit score standards on FHA and VA loans
Headquartered in Kansas City, Missouri, North American Savings Bank (NASB) is a full-service bank that lends in all 50 states. North American Savings Bank has a more extensive mortgage menu than most, including options for veterans, first-time homebuyers, self-employed people, and borrowers with less-than-perfect credit histories. That’s because the bank offers VA loans, FHA loans, and mortgages for people who don’t fit conforming loan standards. NASB also has a streamlined online application process with transparent pricing for browsing borrowers.
- Truist Bank’s Standout Feature:There is an allure of convenience to also have your mortgage through the same institution you bank with
- Offers a full lineup of the major mortgage programs
- Advertises sample mortgage rates on both the SunTrust and BB&T websites
- Mortgages available in 47 states and Washington, D.C.
- Can submit an application online, by phone, or in person
- Gathering mortgage product information is slightly confusing because of the merger
- Mortgages not available in Hawaii, Alaska, or Arizona
Truist Bank, now merged with Suntrust and BB&T under its name, has an extensive footprint across the U.S. through its thousands of brick-and-mortar branches and online presence. Along with the company’s solid menu of mortgage products, easy-to-use online application process, transparency of rate and fee information, and average number of complaints compared to other reviewed lenders, the brand’s website is easy to navigate with several useful resources to help with the borrowing process, such as calculators, videos, and sample mortgages.
Truist offers a comprehensive menu of online or in-person banking accounts such as checking, savings, money market, and CDs. If you are in the market for a bank, looking to switch banks, or already have a Truist account, there is an allure of convenience to also have your mortgage through the same institution. Some lending institutions also give incentives or discounts to existing account holders.
- Sebonic Financial’s Standout Feature:Sebonic’s proprietary borrowing platform, Octane. We found Octane to be one of the best online application processes
- Offers a streamlined digital application and closing process
- Funds conventional loans, jumbo loans, and all three government-backed loan programs
- Available in all 50 states and Washington, D.C.
- Interest-only jumbo ARMs available
- Mortgage rates aren’t published on the lender’s website
- Doesn’t offer home equity loans, HELOCs, renovation loans, reverse mortgages, or construction loans
- In-person branches only available in Charlotte, North Carolina; Gaithersburg, Maryland; and Las Vegas, Nevada
Sebonic Financial is the mortgage lender division of North Carolina-headquartered Cardinal Financial. Sebonic Financial scored well with NextAdvisor because of the company’s high-end digital borrowing experience, full mortgage product lineup which is available in all 50 states, and the lender’s history of below-average customer complaints with the CFPB. Based on 2020 data, Sebonic has less than one complaint per 1,000 loans originated in the same year.
Although Sebonic’s mortgage rates and fees are not listed on the company website, the online system, Octane, makes it easy to access a quote without a credit check or drawn-out process. With Octane, borrowers can get a fast rate quote, start an application, upload documents, and sign closing documents, with real-time updates along the way. We found Octane to be one of the best online application processes compared to other lenders we’ve reviewed. It’s easy-to-use, high-tech, and we appreciate the ability to have a full-online digital experience with the option to speak to loan officers.
- Pennymac’s Standout Feature:Very low complaint history and best overall online user experience with price transparency and user-friendly application process
- Advertises daily interest rates for purchases and refinances
- Customized rate quote available online
- User-friendly online experience
- Available in 49 states (not available in New York)
- Maintains 16 branch locations spread across nine states
- Doesn’t offer home equity products, jumbo mortgages, reverse mortgages, construction loans, and renovation loans
- Doesn’t share information about minimum qualification requirements on its website
Pennymac Loan Services isn’t a well-known name. But the California-based mortgage lender stands out for its convenient online application process, ability to get a rate quote without a credit check, transparency of rates and fees, and low frequency of consumer complaints with the CFPB. In 2020, the CFPB reported less than 0.30 complaints per 1,000 loans. Pennymac offers most major mortgage products and all three-government loans in 49 states, with 16 brick-and-mortar branch locations.
The brand had one of the lowest complaint ratios among lenders we reviewed, but the more noticeable standout feature is the overall online experience. At NextAdvisor, we value price transparency and accessibility. Pennymac met this expectation with daily rate and fee updates and customizable rate quotes on its user-friendly webpage.
- Watermark Home Loan’s Standout Feature:The “Non-QM loan,” or “Non-Qualified Mortgage” for the non-traditional borrowers, such as the self-employed, a history of bankruptcy, or with less attractive debt-to-income ratios.
- Solid mortgage menu of products including all three government loans
- Unique loan product for the non-traditional self-employed borrower
- Calculators and tools very helpful
- Easy digital application process
- Low level of consumer complaints
- Only originates mortgages in 38 states (more states coming soon)
- A breakdown of lender closing fees is not provided with rate quote
Watermark Home Loans based out of Irvine, CA, and currently licensed in 38 states. The company is named one of NextAdvisor’s best mortgage lenders of 2022 because of its streamlined online application process, extensive loan product menu including standard conventional, jumbo, and refinance loans, but also all three government-backed loans (FHA, VA, and USDA). Another stand out product by Watermark is its “non-qualified mortgage” meant to serve borrowers with unique income criteria, such as the self-employed.
Watermark has a fully digital online application process with document uploading capabilities. The company also offers an online notary service so you can opt to complete closing paperwork all online versus in person.
Borrowers can receive a customized rate quote by filling out a form online with basic information and then will get an email with a few different quote options to review that lays out clearly discount points, lender credits, or closing costs options. Watermark Home Loans advertises national daily rate averages along with data indicators of how much each loan type’s rate has moved up or down in the last 30 days.
Watermark has a lower-than-average number of consumer complaints: Less than one complaint per 1,000 originated loans in 2020, according to the CFPB’s consumer complaint database.
- LenderFi’s Standout Feature:Out side of third-party closing fees, LenderFi advertises no additional lender fees as part of the closing costs.
- Rate quotes can be obtained online without a credit check
- Quick and easy to reach a loan representative by phone
- Very friendly customer service
- Does not charge lender fees
- Super transparent pricing
- Short list of loan types: No VA, USDA, or home equity loans
- Loans are not offered in all 50 states
- Company’s website has minimal educational content
Headquartered in Calabasas, CA, LenderFi is named one of NextAdvisor’s best lenders because of the company’s easy-to-use online application process. LenderFi provides a unique feature to its rate quotes: A full, transparent, line-by-line breakdown of all rates and fees before even getting a credit check. Discount points are clearly advertised with how they affect the APR and monthly payment. The quote even estimates homeowners insurance, mortgage insurance (if applicable), property tax costs, and all third-party closing fees.
The company advertises that it does not charge lender fees as part of the closing costs. Third-party closing fees, such as appraisal, title insurance, and inspection costs still apply. But LenderFi says no additional lender costs are passed to the borrowers. Instead, all lender-related costs are rolled into the quoted rate and APR.
- Costco Mortgage Program Standout Feature:Costco members have access to a network of lenders in one marketplace, one credit check, and potential discounts and incentives for borrowing through this platform.
- Costco members get discounts on lender fees
- Applicants can compare loans from several lenders
- The mortgage application process is quick and automated
- Fee discounts are only available to Costco members
- Not a direct lender, but a marketplace program
The Costco mortgage program does not originate mortgages, so it was not included in the list of best mortgage lenders. However, the useful marketplace is worth an honorable mention. Costco members have access to a network of participating mortgage lenders offering discounts and incentives for borrowing through this channel. Through the Costco mortgage marketplace website, you can fill out a universal application, compare loan offers, and cash-in on discounts or lender fees if you choose a lender through this program. The marketplace platform is easy to navigate with transparent pricing and terms. You can get a rate quote online in minutes and will only be contacted by the lender with your expressed permission.
Why It’s Important to Shop Around for a Cash-Out Refinance Lender
It’s important to compare offers from a variety of lenders because each will evaluate your financial situation differently. To secure the best rate, fees, and terms for your situation, most financial experts recommend comparing at least two to three different quotes. Here is what to consider:
Compare Rates With Different Cash-Out Refinance Lenders
The interest rate you end up with is heavily influenced by how much equity you have in your home, your credit history, loan-to-value (LTV), debt-to-income ratio (DTI), and income. But finding the best rate can also be influenced by the lender itself. That’s why getting multiple quotes is in your best interest. A difference of 0.50% doesn’t sound like a lot, but it can save you thousands of dollars over the loan’s life.
Compare Closing Fees With Different Cash-Out Refinance Lenders
Securing the lowest interest rate on a cash-out refinance isn’t the only factor you need to consider when comparing lenders. Two lenders can advertise the same interest rate but charge wildly different closing fees. A low rate with high closing costs can eat away at the savings you thought the low rate provided.
Consider this example on a 30-year fixed, $200,00 loan:
|Loan Amount||Interest Rate||Closing Costs||APR|
Loan A is tempting since it has a lower interest rate. Loan B may be overlooked because of its higher interest rate. But it has lower lender fees and a lower overall APR.
When comparing cash-out offers, the best apple-to-apples comparison is comparing the APR on each Loan Estimate. The best approach is to do plenty of research, narrow it down to a list of two to three, get prequalified with each, and compare the Loan Estimates side by side.
Compare Loans Here:
Home loan comparison calculator
Compare your payment options side-by-side to see which is right for you and your financial situation.
Find the mortgage that’s best for you by comparing the cost of multiple loans over time.
How We Chose the Best Mortgage Refinance Lenders
To find the best cash-out refinance lender, we first looked at 39 reviewed mortgage lenders by NextAdvisor. The lenders chosen to be reviewed are based on consumer search interest. To narrow the list, we developed a scoring framework using a weighted average score between 0 and 5, with more weight awarded to the criteria we determined to be the most important. Then, we eliminated any lender that does not offer cash-out refinances.
Our list doesn’t take into account key financial factors like mortgage rates, APRs, and fees, because those depend on market conditions and your individual creditworthiness. Instead of focusing on those numbers, it’s best to first determine the qualities you want in a lender and how to find the best mortgage rates. Then you’ll be prepared to find the best lender for you.
The factors we used to evaluate the best mortgage lenders are:
- Online Convenience: A lender is scored 1 through 5 based on the company’s online application experience. A 5 is awarded if the company’s mortgage application can be completed fully online with a streamlined process, including uploading documents and a customized rate quote. A lower score is awarded if additional phone calls are needed to process an application or for a poor online user experience.
- Transparency: Lenders are scored 0 through 5 based on the accessibility and transparency of mortgage rates, lender fees, and credit check requirements for rates and/or fees. A 5 is awarded if the lender advertises rates and fees on its websites and doesn’t require a hard credit check to get rates and/or fees. Conversely, a lower score is awarded when consumers cannot easily access rate and fee information and/or must go through a hard credit check to access them.
- Nationwide Availability: Lenders are scored 1 through 5 based on the company’s geographical footprint. A lender can score a 5 if it operates in all 50 U.S. States.
- Loan Product Variety: Lenders are scored 1 through 5 based on their loan product menu and variety of products offered. A high score of 5 is given if most or all mortgage products are available, with a lower score awarded for a limited mortgage menu.
- Customer Satisfaction: To measure customer satisfaction, we reviewed the number of complaints filed against each lender with the Consumer Financial Protection Bureau in 2020. We divided the total consumer complaints with the total number of loans originated over the same time period to get a complaint ratio per 1,000 loans originated. We sourced the total loans originated using publicly accessible data provided under the Home Mortgage Disclosure Act and regulated by the Federal Financial Institutions Examination Council (FFIEC).
Cash-Out Refinancing Frequently Asked Questions (FAQ)
What’s the difference between a cash-out refinance and a rate-and-term refinance?
A cash-out refinance is when you get a new mortgage loan and use it to pay off the existing loan — except you borrow more than what you owe and take cash for the difference. The point of a cash-out refinance is to access a lump sum of money. Common reasons to do a cash-out refinance are to pay down high-interest debt, like credit cards, or fund a worthwhile home improvement project.
Keep in mind, cash-out loans usually have higher interest rates and will likely increase a monthly mortgage payment.
A rate-and-term refinance is when you pay off an existing mortgage with a new loan and with a new rate and terms. The primary purpose of a rate-and-term refinance is to lower the original interest rate and lower the monthly mortgage payment. Freeing up monthly cash flow can help borrowers pay down other debts, save for emergencies, or invest in retirement.
A rate-and-term refinance will either lengthen or decrease the loan term. For example:
How does loan-to-value (LTV) factor into a cash-out refinance?
If you’re looking to take out a cash-out refinance, lenders will be looking at your loan-to-value (LTV) ratio as a measure of your home equity. This calculation helps lenders assess the likelihood you’ll be able to repay the loan. You can find your LTV ratio by dividing your mortgage balance by your home’s value.
- Mortgage balance: $160,000
- Home Value: $250,000
- LTV Ratio: 64%
The higher the LTV ratio, the riskier it is for lenders, Typically, most lenders allow a maximum LTV ratio around 80%. The lower the LTV ratio, the higher your equity, and the better your chances of getting a loan.
How does a cash-out refinance work?
If you have enough equity stored in your home, a cash-out refinance could be an option over a rate and term refinance. Here is how much cash you can get and how it works:
For conventional conforming mortgages, most cash-out loans will be capped at about 80% loan to value, but the LTV for each borrower can depend on a number of factors such as property type, loan type, borrower’s credit score, and state. Closing costs can affect how much cash will be received, too, since the amount can be deducted if not paid upfront.
Here is a cash-out refinance example:
- Current home value: $350,000
- Equity amount: $150,000
- Loan balance: $200,000
- New loan amount: $280,000.
- 4% closing costs on the new loan amount: $11,200
- Cash-out amount: $80,000 (80% LTV)
- Actual cash-out amount: $68,800 (minus closing costs)
In this example, the borrower wants to borrow $80,000, which is at the maximum recommended 80% LTV. The $80,000 will be added to the $200,00 loan balance with a new loan totaling $280,000.
Unless closing costs are paid upfront, the 4% in loan fees will be deducted from the cash-out amount. In this case, the amount of cash at closing would be $68,800.
What can I use the cash for on a cash-out refinance?
Funds from a cash-out refinance can be a way to help pay for things like home improvements, debt consolidation, or even college tuition. For example, if you have credit card debt with a high interest rate, you can use the cash-out funds to pay it off with a lower-rate loan. Even though you’ll still owe the same amount of total debt, you will save in total interest.
Some people use the cash for home improvements, like a kitchen remodel. Home remodels can be useful if they improve the value of the home.
Paying for education is another common use for cash-out funds. Sometimes the interest rate for borrowed cash-out funds is lower than the interest rate on student loans.
How do I find the best cash-out refinance lender?
Outside of price and lender reliability, narrowing down your choice comes down to what is best for you and your personal circumstances. Depending on your goals and needs as a borrower, one lender could be a better fit than another. Here is what to consider:
Each lender may specialize in certain types of refinance loans. If you are doing a cash-out refinance you’ll want a lender with the expertise and ability to service this type of process.
Trust and comfortability
You never want to feel pressured into making a loan choice you’re not comfortable with. Settle on a lender that makes you feel comfortable with each financial decision.
Refinancing with existing bank or lender
Sometimes doing a cash-out refinance with the same lender that originated your previous loan may offer discounts or incentives for refinancing with them. Also, some banks offer incentives or discounts if you also have an account with them, such as a checking, savings, money market, or CDs.
Inquiring about a cash-out refinance with your existing bank and your previous lender is a great place to start. But don’t stop there. Compare at least two to three quotes from various lenders to make sure you get the best deal.