What is the best cash-out refinance company?
When you’re looking for the best cash-out refinance lender, affordable interest rates and loan fees are essential. You want to keep your costs low so you can maximize your cash-back.
Lender expertise and customer service are also important. Luckily, our top picks excel in all these areas.
Your best cash-out refinance lender might come from this list or elsewhere. But no matter what, make sure you compare rates from more than one lender so you know you’re getting the best deal possible.
|Lender||Average Customer Review Score (Out of 5)1||Best Feature(s)2|
|Movement Mortgage||5.0||Lowest average cash-out rates, best customer service (tie)|
|Guild Mortgage Co.||5.0||Best customer service (tie), low average cash-out rates|
|American Pacific||5.0||Best customer service (tie), low average cash-out rates|
|Citizens Bank||4.7||Lowest average upfront fees|
|CrossCountry Mortgage||4.9||Low average cash-out rates, excellent customer service|
|New American Funding||4.9||Low average cash-out rates, excellent customer service|
|Finance of America||4.8||Low average cash-out rates|
|Stearns Lending||4.9||Excellent customer service|
Editor’s note: The Mortgage Reports may be compensated by some of these lenders if you choose to work with them. However, that does not affect our reviews. See our full editorial disclosures.
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To find the best cash-out refinance lenders for 2021, we looked at three key criteria:
- Cost — Who has the lowest average cash-out refinance rates and fees? Keeping costs low helps you maximize your home’s cash value
- Service — Which companies have the best reputation for helpful and efficient mortgage underwriting?
- Experience — We considered the 30 lenders that did the most cash-out refinance loans in 2020. That’s not to say smaller companies can’t offer great deals, but these larger ones are a good place to start as they have plenty of expertise and are widely available
A note on interest rates and fees: We used a government database to access average cash-out refinance rates and loan costs for 2020 (the latest data available). Lenders are partially ranked based on these findings.
But keep in mind that interest rates and fees vary a lot from one homeowner to the next. So the ‘cheapest’ company in our study may not offer your best deal.
Use this list as a starting place to narrow down your search. But be sure to compare personalized estimates from a few different lenders before you refinance so you know you’re getting the best possible deal.
The 8 best cash-out refinance lenders of 2021
1. Movement Mortgage
Movement Mortgage takes our top spot for best cash-out refinance lender for a few reasons. It had:
- The lowest average cash-out refinance rates of any on our list
- The second-lowest average loan costs (closing costs)
- Tied for best scores in online customer reviews
On top of those impressive stats, Movement Mortgage is known for its slick technologies that allow easy online applications and typically deliver ultra-fast loan approvals.
And if you hate applying online? Movement has 650 branches across all 50 states and loan officers who are a call away. So you can work with real, breathing people if you prefer.
This isn’t to say Movement will have the best rates and service for everyone. But it’s certainly worth a look.
As always, compare rate and fee estimates from a few different companies to find the best deal.
2. Guild Mortgage Company
Guild came in a close second to Movement Mortgage. The two were equal when it came to online customer reviews. But Guild had slightly higher average cash-out refinance rates and loan costs.
However, don’t let that put you off. If Guild likes the look of your personal finances, it might well offer you the lowest rate and costs of all. But you won’t know unless you request a quote.
Guild has a user-friendly website with loads of functionality to apply online and track your application. But it also has a physical presence in most states along with excellent customer support over the phone.
3. American Pacific Mortgage
American Pacific Mortgage (APM) tied with our top two lenders for stellar online customer reviews. So, it’s clearly doing a whole lot right. And you can confirm that by visiting its website where it proudly displays its many awards in the industry.
American Pacific is mid-range on our list for both average cash-out refinance rates and loan costs. But, again, apply to see whether you personally can get a below-average rate and costs.
APM has 200 branches and 1,500 loan advisors nationwide. And it encourages borrowers to talk to one of those, either in-person or over the phone. But it’s also helpful when it comes to online technology and offers a free smartphone app.
4. Citizens Bank
Citizens Bank had the lowest loan costs of all the lenders on our list. Indeed, average cash-out refinance fees were $700 less with Citizens Bank than the most expensive lender on this list.
That alone may be enough to earn it a place on your short list. After all, you have plans for the cash you’re going to take out that are way more attractive than giving it to a mortgage company.
Citizens Bank didn’t do quite as well for its average cash-out refinance rates, nor for its online customer reviews. But remember we’re comparing the best of the best here, and Citizens is still excellent in those areas compared to much of the market.
Of course, the same applies to Citizens Bank as to all the others on our list. Don’t be put off by its slightly higher rates. You might be pleasantly surprised by its offer if you ask for a quote. And those low loan costs do look tempting.
5. CrossCountry Mortgage
CrossCountry was the mirror opposite of Citizens Bank. Its average cash-out refinance rate was low — the second lowest among our eight top picks. But its average loan costs were higher.
CrossCountry might appeal to those who value a low monthly mortgage payment over a few hundred dollars of savings at closing.
And you won’t be sacrificing good service for the sake of your cash savings. Because CrossCountry was a solid performer when it came to online customer satisfaction scores.
CrossCountry is one of those lenders that like to engage closely with borrowers. So expect lots of personal attention and help from a licensed advisor.
6. New American Funding
New American Funding (NAF) provides excellent customer service and delivered competitive cash-out refinance rates and loan costs in 2020. That’s a winning combination.
It also offers a unique solution to a common mortgage refinancing problem.
Most people replace their existing 30-year mortgage with a new 30-year mortgage. But that resets the clock, meaning they’ll be paying interest on their loan for longer. And that’s expensive.
New American Funding’s I CAN mortgage let you pick any fixed-rate loan term between eight and 30 years. So you can work out how high of a monthly payment you can comfortably afford and pick the length of your loan based on that number.
In the long run, you might save thousands in interest charges by choosing a shorter-term loan.
7. Finance of America Mortgage
Finance of America was mid-range for loan costs and average cash-out refinance rates. But it was just a little lower on our table for online customer reviews.
Again, it’s perfectly possible that Finance of America might offer the best deal you can get. But you won’t know unless you apply.
This company has 1,400 advisors with a good geographical spread nationwide. And, on average, each has 10 years’ experience in the mortgage business. So you may well find someone near you who knows your local market and who’s happy to share his or her expertise with you.
8. Stearns Lending
Stearns Lending’s customer satisfaction scores were among the best on this list.
However, it doesn’t yet operate in Arizona, Massachusetts, or New York. And its average cash-out refinance rate and loan costs were higher in 2020 than most of the others on our list.
Still, you know by now that ‘higher on this list’ is generally better compared to the rest of the market. And you’ll need to get your own rate quote to see how good a deal Stearns can offer on your cash-out refinance.
Cash-out refinance requirements
It’s still easy for most borrowers to get approved for a standard (no-cash-out) refinance, especially a Streamline refi. But it can be more challenging when you want to take cash out.
Expect lenders to want a respectable credit score of 620 or higher.
Technically, FHA cash-out refinancing allows a minimum credit score of 580. But most lenders want to see at least 600 for this type of loan.
And your debt-to-income ratio (DTI) shouldn’t be high — unless you’re planning to use some of the cash-back to pay down existing debts.
Remember, your new loan amount will be larger than your current mortgage amount. So your mortgage payments will be higher after cash-out refinancing.
How much cash can I take out of my home?
Don’t expect to take out all your home equity when you cash-out refinance.
Lenders generally want you to leave at least 20% of your home’s value untouched. So even if you owned the home outright, the most you’d be able to cash out is 80% of its current market value.
In other words, the maximum ‘loan-to-value ratio’ (LTV) for a cash-out refinance is typically 80 percent. VA loans are generally an exception here.
As a refresher, home equity is the amount by which your home’s market value exceeds your mortgage balance.
Say your home is worth $400,000. You owe $200,000 on your current mortgage loan, which means you have $200,000 in home equity.
Now imagine you want a cash-out refinance. The maximum loan amount for your new loan is $320,000 (80% of the home’s market value). From that amount, $200,000 is used to pay off your existing loan. So your maximum cash-back amount is $120,000 — not the full $200,000 you had in home equity to begin with.
Types of cash-out loans
Cash-out refinancing is possible with almost all types of mortgages except USDA loans.
So, provided you can get approved, your cash-out loan options might include:
- Conventional loans — Ones not backed by the federal government
- Conforming loans — A type of conventional loan that conforms with Fannie Mae and Freddie Mac’s requirements. Good for borrowers with strong credit
- FHA loans — Backed by the Federal Housing Administration. FHA cash-out refinancing is good for lower-credit borrowers
- VA loans — Backed by the Department of Veterans Affairs. VA cash-out refinancing is the only type that lets you withdraw 100% of your equity
- Jumbo loans — Another type of conventional loan that lets borrowers have outsize loan amounts, sometimes in the millions
One thing to consider: If you can afford a cash-out refinance of an FHA loan, you should probably think about switching to another type of mortgage.
That’s because you’ll have to retain equity of 20% of your home’s value when you refinance, which means you can probably get a conventional loan. And if you switch to a conventional loan with at least 20% home equity, you don’t have to pay private mortgage insurance (PMI).
On an FHA refinance, by contrast, you have to pay for mortgage insurance premiums no matter how much home equity you have. So this is often a more expensive refinance option if you want cash back.
Today’s mortgage refinance rates
If you’ve been watching mortgage rates, you’ll know that they were higher by mid-2021 than they were at the start of the year. And most experts believe they’ll rise further throughout 2021 and 2022.
Unfortunately, a recent regulatory change has also opened a gap between home purchase mortgage rates and refinance rates. Those for refinances are now a bit higher.
On top of those issues, cash-out refinances are generally regarded by lenders as slightly riskier than refinances with no cash out. So, they tend to charge rates that are a little higher still.
These aren’t huge differences. But you shouldn’t expect to pay the general rates you see advertised for purchase mortgages — even if you have stellar credit.
Since cash-out refinance rates are higher, it’s extra important to shop around and find the best deal.
Cash-out refinance FAQ
If your existing mortgage balance is much lower than the market value of your home, you may be able to get a cash-out refinance. You simply get a new mortgage with a balance that’s higher than your current one and pocket the difference, minus closing costs.
The best cash-out lender for you depends on your current loan, your home’s value, your credit history, and other factors. You should compare personalized rates from at least 3 lenders to find the best deal. And don’t stop at banks; you might find an online lender, credit union, or mortgage broker suits your needs better. Think about what type of application process you prefer (online or in person?) and how important customer service is to you as well as finding a low interest rate and fees.
You’ll need to get custom estimates from at least 3 mortgage lenders and compare them side by side. This involves filling out a mortgage application and getting a preapproval from each lender — not just looking at advertised rates online. You should also pay attention to lender fees, like the origination fee and discount points, as these upfront charges can eat into your cash-back.
Most lenders want you to keep your mortgage balance at or below 80 percent of your home’s market value after refinancing. To find your maximum cash-out amount, multiply your home’s market value by 80 percent, then subtract your current mortgage balance and likely closing costs. If you need more cash out, you could try hunting for a more sympathetic lender. But they’re not common. And they’ll likely charge you a higher interest rate.
All mortgage lenders base their rates on the risk of defaults and ultimately foreclosures. And a mass of historical data shows that those who take out cash when they refinance are more likely to get into financial trouble later than those who don’t. That means cash-out refinance rates are higher across the board — though you can still find a lower interest rate if you have great credit and rock-solid financials.
In theory, it’s possible to refinance with a score as low as 580 for an FHA loan and 620 for many others. But in reality, lenders often want a score in the mid- to high-600s. Whenever you apply for a new mortgage or other big loan, it’s a good idea to boost your credit score as much as you can. Because the higher yours is, the lower the rate you’re likely to pay.
You won’t know that until you crunch the numbers and see how they line up with your personal financial goals. Assuming you’re refinancing to another 30-year fixed-rate mortgage, a refinance is likely to have lower monthly payments. But it will also mean you’re indebted for longer and will pay more interest in the long run.Get quotes from multiple lenders for both types of borrowing. Choose the home equity loan if you can comfortably afford the monthly payments. And the refinance if you can’t. Of course, if you can get a lower rate by refinancing, that might change the math.
The main dangers with a home equity line of credit (HELOC) are twofold. First, they present a constant temptation (like a credit card) to borrow, repay and re-borrow up to your credit limit. And secondly, they usually have a point at which you can no longer borrow but must repay your balance. That comes as a financial shock for some. But HELOCs can be great if you want to borrow a large sum for only a short time. Because you pay interest only on your outstanding balance. And, once you zero that, you can leave your line of credit untouched.
The main downside is that you’re eating up your equity. That’s fine if you’re using the proceeds for a safe investment or an inescapable emergency. But it’s not good if you’re trying to prop up an unsustainable lifestyle and aren’t prepared to address the underlying issues.There’s another downside that applies to all refinances: You’re resetting the clock on your mortgage. Suppose you’ve had a 30-year mortgage for 10 years and refinance to another 30-year mortgage. You’re now paying off your home for 40 years. And that’s going to cost you in the long run.
Sometimes a cash-out refinance is the best way to access a large amount of cash. Suppose you need to pay a huge medical bill, finance home improvements, or pay down out-of-control debts. All these can be smart uses for a cash-out refi.Then there are gray areas. Does financing a family wedding or a once-in-a-lifetime vacation count as responsible borrowing? Ultimately, only you can decide. Just make sure you understand the long-term financial implications of a cash-out refinancing before you commit yourself.
Find your best mortgage lender
To recap, here are our picks for the eight best cash-out refinance lenders in 2021:
- Movement Mortgage — Lowest average cash-out rates, best customer service (tie)
- Guild Mortgage Company — Best customer service (tie), low average cash-out rates
- American Pacific Mortgage — Best customer service (tie), low average cash-out rates
- Citizens Bank — Lowest average upfront fees
- CrossCountry Mortgage — Low average cash-out rates, excellent customer service
- New American Funding — Low average cash-out rates, excellent customer service
- Finance of America — Low average cash-out rates
- Stearns Lending — Excellent customer service
Remember, any of these could turn out to be your personal best lender. Or it could be a company that doesn’t show up on this list at all.
Cash-out refinance rates change daily, just as mortgage rates do. So once you find a lender you like, keep an eye out for low rates and be prepared to lock.
You can get a head start by requesting personalized rate estimates below.
1Average customer review scores sourced from LendingTree.com, Zillow.com, Bankrate.com, and J.D. Power’s most recent Primary Mortgage Origination Satisfaction Study where available for each lender
2 Average interest rates and loan fees based on the most recent self-reported data all lenders are required to file under the Home Mortgage Disclosure Act (HMDA)