Turn Your Home’s Equity Into Cash

No. Because the cash is borrowed money — not income — it’s generally not taxable. Consult a tax advisor for guidance on your specific situation, especially if you’re using the funds for home improvements that may have tax benefits.

A cash-out refinance replaces your existing mortgage with a new one. A home equity loan is a separate, second loan in addition to your current mortgage. Cash-out refis often have lower rates, while home equity loans let you keep your existing mortgage rate intact.

Most lenders allow you to borrow up to 80% of your home’s value. For example, if your home is worth $400,000 and you owe $200,000, you could potentially access up to $120,000 in cash (80% of $400,000 minus your $200,000 balance).

It can be a smart move if you’re using the funds for high-return purposes like home improvements, consolidating high-interest debt, or investing in your future. Make sure the long-term cost of the refinance aligns with your financial goals.

Closing costs typically range from 2%–6% of the new loan amount and may include appraisal fees, title insurance, origination fees, and other charges. Some lenders allow you to roll these costs into the loan.

A cash-out refinance replaces your existing mortgage with a new, larger loan. You receive the difference between the two loans as a lump sum of cash, which you can use for any purpose.