Top refinance lenders offering the best cash-out opportunities in 2025

Top refinance lenders offering the best cash-out opportunities in 2025

In the real estate market, accessing your home's equity can be a valuable financial move. Two popular methods for doing so are cash-out refinancing and home equity lines of credit (HELOCs), each offering unique advantages and disadvantages.

Cash-Out Refinance

This option replaces your existing mortgage with a new, larger mortgage loan, providing a lump sum cash payout. Cash-out refinancing typically offers lower interest rates than HELOCs, thanks to it being a primary mortgage loan. The repayment terms are fixed, with monthly payments of principal and interest over 15 to 30 years. However, closing costs are higher, usually ranging from 2% to 5% of the loan amount.

Home Equity Line of Credit (HELOC)

A HELOC offers a revolving line of credit, allowing you to draw money as needed up to a limit, similar to a credit card. Interest rates are usually variable, which can rise or fall over time. Repayment terms include interest-only payments during the draw period (usually 10 years), followed by principal and interest payments over 10 to 20 years. Closing costs and fees are generally lower compared to refinancing.

Choosing Between Cash-Out Refinance and HELOC

Cash-out refinancing is ideal for borrowers who want a lump sum and predictable payments over a long period, while HELOCs are better suited for those who prefer ongoing access to funds or an undetermined amount, with flexibility in borrowing and repayment.

Pros and Cons

Pros of Cash-Out Refinancing: - Often lower and/or fixed interest rates compared to HELOCs, which can save money over time. - Consolidates debt into one payment, potentially simplifying finances. - Can be used to modify original mortgage terms (e.g., extend term, shorten term).

Cons of Cash-Out Refinancing: - Higher closing costs (2%-5% of loan amount). - You are restarting the mortgage clock with a new loan term, which could increase total interest paid if extending term. - Requires refinancing approval and potentially stricter credit and income qualifications.

Pros of HELOC: - Flexibility to borrow money as you need over the draw period. - Interest-only payments possible during the draw period, lowering initial monthly costs. - Lower closing costs and fees compared to refinancing.

Cons of HELOC: - Variable interest rates that can increase, raising payments unpredictably. - You keep your original mortgage plus a separate loan payment, increasing monthly obligations. - After the draw period, payments increase as you repay principal and interest.

Leading Providers of Cash-Out Refinancing

Several financial institutions offer cash-out refinancing, each with its own credit requirements and services. Here's a snapshot of some popular providers:

• Chase: Offers cash-out refinancing for conventional, jumbo, FHA, VA, and refinancing loans. Credit requirements range from 620 for conventional loans to 680 for jumbo loans. With 4,700 branch locations across the U.S., Chase provides both online and in-person services.
• PNC Bank: Provides cash-out refinancing in all U.S. states and offers online and in-person application options. Credit requirements vary, with a minimum of 620 for FHA, conventional, and jumbo loans, and 640 for USDA loans. However, PNC Bank has received a below-average J.D. Power rating for mortgage servicing, and its mobile app functionality is limited.
• PenFed Credit Union: Offers the convenience of managing banking and mortgage services with one provider. It provides cash-out refinancing for conventional, jumbo, FHA, VA, and refinancing loans. Credit requirements are 620 for FHA loans, 650 for conventional loans, and 700 for jumbo loans.
• SoFi: Offers cash-out refinancing for conventional, FHA, VA, and refinancing loans, with credit requirements of 600 for VA and FHA loans, 620 for conventional loans. SoFi provides a close-on-time guarantee or up to $10,000 to cover additional costs. It operates mostly online and offers up to $9,500 rebate if you work with a SoFi partner real estate agent. However, SoFi does not offer USDA loans, and its services are not available in Hawaii or New York.
• Bank of America: Offers cash-out refinancing for conventional, jumbo, FHA, VA, and refinancing loans, with credit requirements of 620 for conventional loans. Bank of America operates in all U.S. states and provides its services online and in-person.

Navy Federal Credit Union

Navy Federal Credit Union offers cash-out refinancing for conventional, jumbo, VA, and refinancing loans, but credit requirements are undisclosed. It stands out by allowing up to two rate relocks and providing a rate-match guarantee or paying $1,000.

Better

Better operates mostly online, offering cash-out refinancing for conventional, FHA, VA, and refinancing loans. Credit requirements are 580 for FHA loans, 620 for VA and conventional loans. It offers real-time online rates, three-minute preapprovals, and hybrid closings.

By understanding the differences between cash-out refinancing and HELOCs, homeowners can make informed decisions about accessing their home's equity, ensuring they choose the option that best fits their financial needs and goals.

Cash-out refinancing and HELOCs are investment opportunities within personal-finance and real-estate, providing homeowners the potential to leverage their home equity. Cash-out refinancing and home equity lines of credit (HELOCs) offer diverse benefits such as flexibility for the latter or fixed interest rates for the former, respectively. In the home-and-garden sector, informed decisions can be made based on the unique needs and preferences of individuals when considering cash-out refinancing or HELOCs for lifestyle improvements or financial goals.

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