Last reviewed October 5, 2026. Research completed for the single stale slug as of October 2026. This article is general education and not a commitment to lend, approval, rate quote, legal advice, tax advice, or individualized financial advice.
Current information to know
A cash-out refinance replaces the existing mortgage with a new mortgage secured by the same property and increases the mortgage balance to provide equity proceeds; the proceeds may be used for purposes allowed by the applicable loan program. Fannie Mae expressly lists paying off the existing first mortgage, subordinate liens, closing costs, points, prepaids, and taking equity out for any purpose as acceptable uses under its guide. Read the applicable official guidance at consumerfinance.gov.
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Book a Strategy Call →- ▸Unlike a home-equity loan or HELOC, a cash-out refinance replaces the original first-lien mortgage; those alternative products generally leave the original first lien in place. This is a product distinction, not a recommendation.
- ▸The home serves as collateral. Failure to make payments or meet other loan conditions can result in foreclosure and loss of the home.
How to prepare
- ▸What a cash-out refinance is: a new mortgage replaces the existing mortgage and may provide equity proceeds.
- ▸How it differs from a HELOC or home-equity loan: whether the original first-lien mortgage remains in place.
- ▸Potential uses and trade-offs: permitted uses vary; adding costs to the new balance increases borrowing; payment, term, rate, and balance can change.
Terms, eligibility, property requirements, pricing, and approval depend on the complete transaction and current program guidance. Do not rely on general education as a loan decision or guarantee.
Use current documents and disclosures
Ask which current product or program applies, what documents are needed, how the lender will evaluate the transaction, and which written disclosures show the actual costs and terms. Compare written information carefully and consult an appropriate professional for legal, tax, or other individualized questions.
Sources
Official sources reviewed: consumerfinance.gov, selling-guide.fanniemae.com, sf.freddiemac.com. Requirements and the facts of an individual transaction can change, so review current program information and written disclosures before relying on this general education.
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Written by
Director of Operations · Skyline Mortgage
Andrew oversees educational website content and operations. This article is general education only and does not constitute financial, legal, or tax advice. Loan programs, rates, and requirements are subject to change. Contact a licensed Skyline Mortgage professional for current program availability and personalized guidance.