Best cash-out refinancing lenders in 2021

Tapping into your home’s equity can be a smart move, whether it’s reducing high-interest debt, financing a home renovation, paying school fees, or progressing toward another financial goal. One way to do this is to use a refinancing of collection, in which you refinance your mortgage for more than you owe and withdraw the difference in cash. Numerous mortgage lenders offer cash refinancing, and Bankrate has evaluated several to determine the best ones to consider. Here’s our guide to the best cash-out refinancing lenders in 2021.


Methodology

To determine the best withdrawal refinance lenders, Bankrate evaluated lenders based on several criteria, including cost (competitive withdrawal refinance rates and low or no fees); timeliness (approval and closing times); and testimonials from borrowers.


The Best Cash-Out Refinance Lenders

Loan deposit

LoanDepot has refinanced $ 179 billion in mortgages since its inception in 2010, with more than 200 branches in the United States serving borrowers in person, online and over the phone. For borrowers interested in accessing their home equity in cash, the lender’s refinancing options include:

  • Refi cash-out conventional and jumbo
  • Refusal to withdraw from the FHA
  • VA cash-out refi

When working with LoanDepot on a refinance with withdrawal, you can rely on the lender’s “no-direction” policy to get the best refinance option for your needs. Plus, if you come back for a second refinance, you won’t have to pay any fees to the lender, and the lender will reimburse the appraisal fee as part of their “lifetime guarantee”.

Refinancing through LoanDepot can take 45 to 60 days, depending on the lender’s website, and in a cash refinance, you will receive the funds one to three days after closing.

On the other hand, LoanDepot does not easily provide a refinance withdrawal rate through its website, so you will need to contact the lender to compare your options. The lender also does not offer Home Equity Lines of Credit (HELOCs) or Home Equity Loans, which could be alternatives to a withdrawal refusal.

PennyMac

Founded in 2008, PennyMac offers a range of loan options for borrowers, including cash refinancing for those who wish to leverage their home equity. Lender withdrawal refi products include:

  • Refi conventional cash-out
  • Refusal to withdraw from the FHA
  • VA cash-out refi

The FHA and VA cash refinance options also apply to a non-FHA or non-VA loan if you are interested in refinancing to an FHA or VA loan, according to the lender’s website.

Among its advantages, PennyMac advertises low withdrawal refinance rates, which can allow you to easily make side-by-side comparisons with other lenders. You can also take advantage of the lender’s refinance calculators and a home value estimator to get a better idea of ​​how much equity you have.

While PennyMac already offers competitive withdrawal refinance rates, its “best rate promise” rewards you with a $ 250 gift card if you find a better deal from another lender. You will also benefit from the Lender’s Closing Guarantee, which rewards you with a $ 500 gift card if the lender delays the closing.

PennyMac doesn’t have a physical location though, which can be a downside if you’re looking for an in-person experience.

Better.com

Better.com is touted for its 100% online process and fast service. It has somewhat limited loan options compared to other lenders – no VA or USDA loans, for example – but its cash refinancing options include:

  • Refi conventional cash-out
  • Refusal to withdraw from the FHA

What sets Better.com apart is the ability to review current withdrawal refinance rates on the lender’s website by simply entering information about your home and the desired withdrawal. The lender also doesn’t charge a lender fee, which can still save you money when you refinance.

Better.com has also been named one of the Bankrate best mortgage lenders overall and best online mortgage lenders in 2021, with quick pre-approvals (in just three minutes), rate freezes (in just 30 minutes) and closings earlier than the industry average, according to the lender.

A few drawbacks, however: Better.com is not available in all states, so refinancing through this lender might not be an option for some. There are also no branches.

Bank of America

If you’re looking for a more traditional lender for your withdrawal refinance, consider Bank of America, the second-largest bank in the United States with thousands of branches across the country. In addition to other types of home loans and refinancing, Bank of America offers borrowers:

  • Refi conventional cash-out
  • Refusal to withdraw from the FHA
  • VA cash-out refi

The bank has also been named one of Bankrate’s best mortgage refinance lenders globally in 2021.

Current Bank of America customers enjoy benefits that others may not have access to. The FHA and VA refinance options are only available to current mortgage customers, for example, and customers enrolled in the bank’s Preferred Rewards program might be eligible for a rebate on origination fees of up to $ 600.

Bank of America’s interest rates are posted on its website for quick comparisons, but the bank does not list lenders’ fees online. Like other lenders, it also has a home value estimator so you can get a feel for your home’s value and your withdrawal options.

New American funding

New American Funding has been proven to be a trusted mortgage lender, with an A + rating from the Better Business Bureau and five out of five stars among Bankrate users. The lender’s cash refinancing options include:

  • Refi cash-out conventional and jumbo
  • Refusal to withdraw from the FHA
  • VA cash-out refi

With cash refinancing through New American Funding, you can expect to receive your funds within three days of closing. Notably, the lender has flexibilities that others don’t, making it an attractive option for bad credit borrowers. The lender was also named one of the best mortgage lenders for low credit borrowers in 2021.

New US funding is available in all states except Hawaii, and brick and mortar branches can be found in many of them.

Fee information is not available on the lender’s website, but some rate offers are advertised to the public. To initiate the withdrawal refi process, you can call, request a quote online, or apply in person.

Cash refinancing needs

To be eligible for a refi cash-out, you must generally:

  • Have a minimum credit score of 620
  • Have a debt-to-income ratio (DTI) of less than 50%
  • Maintain at least 20% equity in your home after withdrawal (depending on loan type)

Who is cash-out refinancing for?

Refinancing with withdrawal is best when interest rates are low and for borrowers who meet the above requirements and have specific goals for the funds they are withdrawing. This includes those looking to consolidate high-interest debt, complete home renovations, or fund a college education.

Cash-out refinancing vs interest rate and term refinancing

A withdrawal refinance is different from a rate-and-term refinance, in which you lower your mortgage rate, change the loan term, or both. A withdrawal refi can lower your rate as well, but it’s mostly about taking out some of your home equity in a lump sum, which adds to your loan amount and increases the interest you will pay. These funds can be used for a variety of purposes, such as a major home renovation.

Cash-out refinancing vs HELOC

Cash refinancing isn’t the only way to leverage your home equity. You can also pursue a home equity line of credit (HELOC).

With a HELOC, your first mortgage remains intact, but you will have access to a revolving source of funds throughout the HELOC drawdown period, which can be up to 10 years. You are only required to pay interest on the funds you withdraw during this period. Once the draw period is over, any balance must be repaid, usually over 15 or 20 years.

The advantages of a HELOC are that you are only responsible for paying for what you use, you can access funds at any time, and you will not pay interest on unused funds. However, HELOCs come with variable interest rates, which means they change and could be higher than what you would get with a withdrawal refi.

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