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When you refinance do you get money back

A cash-out refinance replaces your current mortgage with a new, larger loan. In return, you receive the cash difference between the new amount borrowed and your old mortgage balance. Holden Lewis is a mortgage reporter and spokesperson who joined NerdWallet in 2017.

How much do you get back on a refinance?

In general, lenders will let you draw out no more than 80% of your home's value, but this can vary from lender to lender and may depend on your specific circumstances. One big exception to the 80% rule is VA loans, which let you take out up to the full amount of your existing equity.

Does refinancing set you back?

Refinancing doesn't reset the repayment term of your loan, but it does replace your current loan with a new loan. You may be able to choose from different offers for your new loan depending on your goals, including a longer or shorter repayment term.

Do you lose money when you refinance?

The goal of the refinancing process is to take out a new loan to replace your mortgage in order to reduce rates and build equity faster. However, refinancing can cause you to lose money in the long run if you are not careful and the process itself can impact your home's equity overall.

What happens after refinancing?

If you refinance to a new 30-year loan, you'll start over and have 30 years again to repay it. If you refinance to a new 20-year loan instead, you'll pay your loan off five years earlier. Refinancing comes with closing costs, which can affect whether getting a new mortgage makes financial sense for you.