Cash-Out Refinance

A cash out refinance in Florida replaces your mortgage with a larger one and hands you the difference at closing.

Key features of a cash out refinance in Florida

• Your existing mortgage is replaced by a larger loan
• You receive the difference as cash at closing
• Conventional: generally up to 80% loan-to-value
• FHA: generally up to 80% loan-to-value
• VA: higher limits for eligible veterans, though many lenders cap below the maximum
• You can use the money for any purpose

Consolidating debt moves it onto your house

Debt consolidation is the most common reason people do this, and it is the one that deserves the most thought.

Credit card balances are unsecured. If your finances collapse, that debt is painful and damaging, yet no one takes your home over it. Roll the same balances into a mortgage and they become secured against the house. You have swapped a 24% rate for something near 7%, which looks like an obvious win, and the monthly saving is real. However, you have also converted a debt that could never cost you your home into one that can.

Therefore the calculation is only sound if the spending that created the balances has actually stopped. Plenty of homeowners consolidate, feel the relief, and rebuild the card balances within two years, at which point they carry both. Ask yourself honestly which case you are in before you sign.

Stretching the term matters too. Moving a five-year car loan into a 30-year mortgage lowers the payment while raising the total interest considerably, since you now pay it over six times as long.

Timing and seasoning

Most programs want you to have owned the home for at least twelve months before taking cash out, and lenders use the appraised value rather than your purchase price. Since Florida values have risen for many owners, an appraisal often unlocks more than expected. Meanwhile you must leave equity behind, normally 20%, so the maximum is rarely the whole of your equity.

Two Florida costs to build into the maths

• Documentary stamp tax applies to the full new loan amount, not just the cash you take, so refinancing a $300,000 balance to $380,000 is taxed on $380,000
• Intangible tax applies to the new money
• If your insurance premium has risen since you bought, it re-enters your debt-to-income ratio at today’s figure, which can reduce what you qualify for

When something else fits better

If you like your current rate, replacing the whole mortgage to reach a portion of your equity can be expensive. Compare a HELOC or a home equity loan, both of which leave the first mortgage untouched. See HELOC versus home equity loan for the difference, or the full refinancing guide. Veterans should read VA cash-out refinance, which follows different rules.

Loan-to-value limits, seasoning rules and VA maximums vary by lender and program. Florida documentary stamp and intangible taxes follow Chapters 199 and 201, Florida Statutes. The CFPB owning a home guide covers comparing refinance offers.