For homeowners
Cash-Out Refinance in Michigan
A cash-out refinance replaces your current mortgage with a larger one and hands you the difference in cash. It also replaces the rate you hold today, so check that rate before anything else.
- No credit pull to talk
- Licensed mortgage broker, NMLS 2041154
Is it a fit
Is a cash-out refinance for you?
You are willing to replace your mortgage
Your current loan is paid off and a new, larger one takes its place, on its own terms and its own schedule.
You need one lump sum
One amount, paid out at closing, for a cost you can name. Money you expect to need off and on over time fits a line of credit better.
Your budget has room
You will carry one payment rather than two, but it is built on a larger balance than you owe now. On a fixed-rate cash-out the principal and interest payment stays the same for the life of the loan.
Cash-out refinance against borrowing behind your mortgage
A cash-out replaces your existing mortgage with a larger one. That is the crucial difference: whatever rate and term you have now, you give up. Sometimes that is a bargain and sometimes it is very expensive.
| Consideration | Cash-out refinance | Second loan behind it |
|---|---|---|
| What happens to your current mortgage | It is paid off and replaced. The rate you have today is gone. | Untouched. It carries on exactly as it is. |
| When this is clearly the better move | When today's terms are no worse than the ones you hold, so giving up your current rate costs you nothing, though the new loan has its own closing costs. | When you hold a low rate you would never get back. |
| Amount available | Usually up to 80% of the value, less what you owe. | Generally a smaller share, since it sits behind the first loan. |
| Cost to set up | Full closing costs on the whole new balance. | Lower, because the loan is smaller. |
| Number of payments afterwards | One. | Two, on different terms and possibly different schedules. |
| The question that settles it | What rate are you on now? If you do not know it, find out before anything else. | Same question, opposite answer. |
Compare both against my current loan
Guidelines
Guidelines for this loan
What lenders usually check on a cash-out refinance. If one of these is out of reach, a second loan behind your mortgage may still work.
Credit
Minimums vary by program; conventional cash-out usually starts at 620. Pricing and the amount available improve with a higher score.
Read the guideEquity
The new loan is capped at a share of the appraised value, so enough equity has to stay in the home after it closes. The questions below work an example.
Read the guideCredit And Debt
Many lenders look for total monthly debts, the new payment included, at or under 43% to 45% of income; conventional files can reach 50% with strong credit or reserves.
Read the guideClosing Costs
On a cash-out, closing costs are figured on the whole new balance, not just the cash you take out. That is why a cash-out costs more to set up than a smaller second loan.
Read the guideOfficial sources
Check the rules at the source
Program guidelines change. These are the official pages we check them against.
Questions about this loan
If yours is not here, ask it on the call. There are no dumb questions.
Will a cash-out refinance cost me the rate I have now?
Yes, and it is the first thing to check. A cash-out replaces your existing mortgage entirely, so whatever rate and term you hold today are gone. If you are sitting on a low rate from a few years ago, borrowing behind it with a home equity loan or line often costs less overall when your current rate is well below today’s, even though the rate on that second loan looks higher.
How much cash can I actually take out?
Most cash-out refinances allow up to 80% of the home’s value, minus what you still owe. On a $400,000 home with a $220,000 balance that is roughly $100,000 before costs, and the closing costs are figured on the whole new loan of about $320,000, not on the $100,000 you take out. VA has its own rules and can go higher for eligible borrowers. An appraisal sets the value, not an online estimate.
What can I use the money for?
Anything. Most people use it for renovations, consolidating higher-interest debt, or a down payment on another property. There is no restriction on the use, though what you spend it on should be worth trading your current mortgage terms for.
How long does a cash-out refinance take?
It runs on the same steps as a purchase: a full application, an appraisal and underwriting, then closing. If the property is your primary residence there is also a three business day right of rescission after closing before the funds are released.
Does taking cash out hurt my credit?
There is a small temporary dip from the credit pull and from opening a new account, and the old mortgage closing shortens your average account age. Both recover. Using the cash to clear revolving balances can help your score if those balances stay paid down.
Does a cash-out refinance raise my Michigan property taxes?
A refinance does not uncap your taxable value. Michigan’s law lists a transfer for security, and the discharge of a security interest, as not being a transfer of ownership, so your taxable value keeps its cap. Changing who is on the deed is a different question, so ask before you add or remove anyone.
What our clients say
Did my refi with Samantha. What a smooth process. … [A]ll steps explained in a way I completely understood. Such a pleasure to work with!
I highly recommend Align Lending to anyone looking for a mortgage broker in Southeast Michigan. The team was knowledgeable, responsive, and easy to work with.
Individual experiences. Results vary.
Ask Samantha whether this loan fits
Bring your current mortgage statement and what the money is for. Samantha will compare a cash-out refinance with a second loan that leaves your current rate in place.
- 1
Bring your mortgage statement
The rate, balance and term you hold today decide most of this.
- 2
Samantha compares both routes
A cash-out refinance against a second loan behind your current mortgage, closing costs included.
- 3
You choose with the numbers in front of you
Which one costs less over the years you expect to carry it, or whether to leave it alone.
Start with your question
Start with a home equity strategy reviewAlign Lending LLC, NMLS #2041154, is a mortgage broker. Samantha Shelton, NMLS 1647301. Equal Housing Opportunity. Licensed in Michigan, Ohio, North Carolina, Florida, Louisiana and Texas. Program guidelines on this page are general and change over time; they are not a credit decision, a preapproval, a commitment to lend, or an offer of credit. Approval depends on your full application, the property and the lender's current guidelines.
