Question 1

How much equity do I need for a cash-out refi in Washington?

Accepted Answer

Conventional cash-out caps at 80% LTV on a primary residence — so you keep 20% equity untouched. FHA cash-out also caps at 80%. VA cash-out can go to 100% in many cases (one of the best deals in lending). Given WA appreciation, most homeowners who bought before 2022 have plenty of room — often more than they realize.

Question 2

What can I use the cash for?

Accepted Answer

Anything. Home improvements, debt consolidation, college tuition, business capital, emergency reserves, investment property down payment. The IRS treats interest deductibility differently depending on use (see below), but the loan itself has no restrictions.

Question 3

Are cash-out refinance rates higher than rate-and-term?

Accepted Answer

Yes — typically 0.25–0.75% higher, because the lender takes on more risk. Even with the premium, it's almost always the cheapest large-dollar borrowing available. A cash-out refi rate is usually less than half what you'd pay on a HELOC or personal loan.

Question 4

How long does a cash-out refinance take?

Accepted Answer

Usually 30–45 days from application to funding. On a primary residence, federal law requires a 3-business-day rescission period after closing before funds are disbursed — that's a consumer protection, not a delay you can waive.

Question 5

Is cash-out refinance interest tax-deductible?

Accepted Answer

If the cash is used to substantially improve the home securing the loan, interest on up to $750,000 of combined mortgage debt is generally deductible. If used for other purposes (debt consolidation, college, investment), the portion of interest tied to that cash is typically not deductible. Always confirm with your CPA — I'm not a tax advisor.

Question 6

How much cash can I actually take out?

Accepted Answer

On a $700,000 home with $300,000 owed, you have $400,000 in equity. At 80% LTV cash-out conventional, your new loan can be $560,000 — giving you $260,000 cash (minus closing costs). The math scales linearly: more equity = more cash, up to the LTV cap.

Question 7

What credit score do I need for cash-out?

Accepted Answer

Conventional cash-out: 660+ for most lenders, 680+ for best pricing. FHA cash-out: 580+. VA cash-out: 580+ (some lenders 620+). Higher scores get materially better rates — the difference between 680 and 740 on a cash-out can be 0.5%.

Question 8

Can I do a cash-out refi on an investment property in WA?

Accepted Answer

Yes — capped at 75% LTV for conventional, with stricter reserve and credit requirements. Popular for Tacoma, Spokane, and Vancouver landlords who've built equity and want to recycle it into a new acquisition.

Question 9

Cash-out refi vs. HELOC — which is better?

Accepted Answer

Cash-out refi if you want a fixed rate, predictable payment, and you're already considering refinancing for rate. HELOC if you want flexible access to funds, only pay interest on what you draw, and want to keep your current first mortgage rate. I model both so the comparison is real, not theoretical.

Question 10

Do I have to pay WA excise tax on a cash-out refinance?

Accepted Answer

No — Washington's real estate excise tax applies only to property transfers (sales), not refinances. That's a meaningful savings vs. a sale-and-rebuy strategy if you're just trying to access equity.

Cash-Out Refinance

Key Features

How it works

What this looks like in Washington

Pros

Cons

Common Questions

Related Loan Types

Popular WA markets for Cash-Out Refinance

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