The Quick Read: Checking a lender comes down to three things: a valid license with a clean record, a written estimate whose total cost holds up, and a file that fits the agency rules the way that lender applies them. Most borrowers compare price first, but price only matters once the other two checks pass.
Here is the order that works:
1. Confirm your file fits the cash-out rules before you apply anywhere.
2. Verify each lender’s license and complaint record.
3. Request comparable written estimates.
4. Ask about stricter lender-specific rules.
5. Compare the final paperwork to the estimate.
All program figures below are subject to lender guidelines and full file review. Nothing here is a commitment to lend.
What Does “Checking a Lender” Actually Mean?
It means separating three questions that people blur together. The first is legitimacy: is this company allowed to make or arrange the loan, and does it treat borrowers fairly? The second is fit: can this lender do your particular file? The third is price: what will the loan cost you in total?
Most shoppers jump straight to price. That is the third question, and it only matters once the first two check out. A cheap quote from a lender that cannot close your file is worth nothing. A cheap quote that changes at the last minute is worth less than nothing.
The mechanics are simple enough. A conventional cash-out refinance replaces your current first mortgage with a new, larger one, and you take the difference in cash. Per the Fannie Mae Selling Guide, the new loan pays off existing mortgages with a new first mortgage on the same property. It can also be a new mortgage on a home you own free and clear. Closing costs, points and prepaid items can be rolled into the new loan.
Before You Contact Anyone: Screen Your Own File
Your file decides whether any lender can do this loan. Run through these items first, because they are the same at every conforming lender.
Leverage. Across the wholesale programs I place files with, a conventional cash-out refinance on a one-unit principal residence tops out at 80% loan-to-value (LTV). LTV is the new loan balance divided by the appraised value. On two- to four-unit principal residences, second homes and investment property, the cap is 75%. The Fannie Mae Eligibility Matrix lists leverage by unit count and occupancy, and manufactured homes carry a much lower cap. In plain terms, you keep at least 20% equity in a one-unit home.
Ownership time. At least one borrower generally needs to have been on title for six months. There are named exceptions, covered below.
Age of the loan being paid off. This is the one people miss. Separate from your title time, the first mortgage you are paying off must be at least 12 months old, counted note date to note date. Six months on title does not make you eligible if your current loan is newer than that.
Occupancy. For a primary-residence cash-out, every borrower on the loan must occupy the home. If the property is a second home or a rental, occupancy sets a lower leverage cap.
Credit and ratios. The wholesale conventional programs I work with start at a 620 decision score, and the automated underwriting finding governs most files. The total debt-to-income ceiling is 50%. Manually underwritten loans sit at 36% or 45%, depending on score and reserve factors in the Eligibility Matrix. Reserves, meaning money you hold after closing, can also apply when the ratio is above 45% on automated files. Some lenders set a higher score floor than the agencies do, which is exactly why this screen comes first.
Loan size. The new, larger loan must fit under the conforming loan limit for your county. The FHFA sets baseline and high-cost limits, and they vary by county. Go over, and you are in jumbo territory, which follows different rules.
Once you have run this screen, you know what you can ask for. Lendmire’s cash-out refinance programs page lays out how these conventional guidelines work for homeowners.
How Do You Verify a Lender Is Legitimate?
Look up the company and the individual loan officer in the free national mortgage licensing database, which your state mortgage regulator’s website points you to. Then search the federal complaint database by company name. Together these checks take minutes and screen out most of the real problems.
Step 1: License lookup. Search the company and the loan officer by name. Confirm three things:
- The company is licensed in your state.
- The loan officer is individually licensed and the status is active.
- The employer listed for the loan officer matches the company name on your paperwork.
Statuses vary by state, and the state regulator is the final word. California’s regulator, for example, explains that an “Approved – Inactive” status means the person is not authorized to originate loans. That is one state’s example. Treat any status other than a clean, active license as a reason to ask questions.
Step 2: Complaint record. The CFPB Consumer Complaint Database publishes complaints after the company responds and confirms a commercial relationship, or after 15 days, whichever comes first. Search by company name and read a few actual complaints. Weigh the count against the size of the company, since a large lender will have more complaints than a small one.
Here’s the catch: a thin record is not proof of a clean one. Complaints referred to other regulators, such as those about depository institutions under $10 billion in assets, are not published in the database. Use it as one signal, not a verdict.
Bank, Broker or Credit Union?
All three can deliver a conventional loan. They differ in who funds it and how many options you see. Here is how I would frame the choice.
| Factor | Bank or Credit Union | Mortgage Broker |
|---|---|---|
| Who funds the loan | The institution itself | A wholesale lender |
| Program range | That institution’s menu | Several lenders’ menus |
| Existing relationship | Often helps with service | Not needed |
| Best for | Simple files, loyalty perks | Files needing a lender match |
A broker, which is what Lendmire is, arranges the loan with a wholesale lender rather than lending its own money. A broker is paid by the lender or by the borrower, and the compensation is disclosed on the Loan Estimate. That is true of any broker, so compare the full terms rather than guessing.
This one is a genuine toss-up for plain-vanilla files. If you meet the rules cleanly, a bank or credit union you already use may price it fine. If your file has a wrinkle, such as a recent purchase or a borrower-on-title question, seeing several lenders’ guidelines through one broker can save you from a dead end.
Ask About Overlays and Eligibility Traps
An overlay is a rule a lender adds on top of the agency baseline. A lender can be stricter, and the file that fits the agency rules can still fail a lender’s version of them.
Common places for stricter lender rules include minimum credit score, how a lender counts title time, how it treats a home listed for sale recently, and how it handles a low appraisal. The two agencies also have their own guides, so a lender’s choice of investor can matter at the margins for title time, entity-held property and fees.
Ask these before paying for an appraisal or application fees:
- Do you apply any stricter score or ratio than the agency minimum?
- Do you count the age of my current loan the same way the agency does?
- Has a recent listing or a low valuation ever stopped a file like mine?
A lender that answers plainly is a good sign. One that dodges is telling you something.
Where the General Rule Breaks: Named Exceptions
The six-month and 12-month tests have exceptions. Know them, because they can change which lender can help you.
- Delayed financing. If you bought the home with cash within the last six months, you may be able to do a cash-out refinance inside that window. The purchase must be arm’s length and documented with a settlement statement showing no mortgage financing. The new loan is capped at your documented initial investment plus closing costs, prepaid fees and points, and gift funds used to buy generally cannot be reimbursed. Cash-out pricing applies.
- Inheritance or a legal award. Agency rules carve out homes acquired by inheritance or awarded in a divorce or similar proceeding. Confirm the current guide text with your lender.
- Trust or entity title. Time held in a revocable trust can count toward the six months when you are the trust’s primary beneficiary. Those conditions are specific, so ask.
- HELOC being paid off. The 12-month age test does not apply when the first lien being refinanced is a home equity line of credit. There are also special-purpose exceptions, such as buying out a co-owner.
- Delinquent property taxes. Financing real estate taxes that are more than 60 days delinquent is ineligible unless an escrow account is set up, with a narrow exception where law prohibits requiring one.
- PACE and buydowns. Agency rules have treated outstanding PACE obligations and temporary rate buydowns as complications for cash-out. These details change, so check the current guide.
- Student loan payoffs. Fannie Mae waives its cash-out pricing adjustment when proceeds pay off eligible student loans. Ask whether the lender delivers loans that way.
- Some states add rules. A few states have their own cash-out constitutional or statutory rules, and Texas is the best-known example. In Texas, a cash-out on the homestead is capped by the state constitution at the agency figure.
One practitioner observation: in my experience, the files that run into trouble are rarely the ones with weak credit. They are the ones where the borrower assumed six months on title was the only clock. The 12-month age on the old loan catches people, and so does a recent refinance. Ask about both clocks in your very first conversation.
Questions to Ask Every Lender
Use the same script with each lender so the answers line up.
Pricing and costs
- Is this estimate for a cash-out refinance, not a rate-and-term refinance?
- Which costs are rolled into the loan, and which do I pay at closing?
- Is the quote locked, and until when?
Eligibility
- Do you add any requirements on top of the agency rules?
- Does my current loan’s age meet your test?
- What happens if the appraisal comes in low?
Process
- Who orders the appraisal, and do I get a copy before closing?
- Will you put every quote and fee in writing?
- Who is my contact if something changes?
A cash-out refinance requires a new appraisal, and the appraised value sets your maximum loan. The CFPB’s home loan toolkit notes you are entitled to a copy of the appraisal before closing.
Get Quotes You Can Actually Compare
Compare Loan Estimates, not verbal quotes. The Loan Estimate is a standardized form that lenders are required to deliver after receiving your application, with timing that varies by file and lender. The CFPB’s Know Before You Owe materials explain that it was built so you can shop and compare offers side by side.
The comparison only works if the inputs match. Request the same kind of loan from each lender:
| Match This Across Quotes | Why It Matters |
|---|---|
| Loan type | Cash-out and rate-and-term price differently |
| Loan amount | Different balances change every cost line |
| Lock status | An unlocked quote can change anytime |
| Term | A different term is a different loan |
| Date requested | Same-day quotes avoid market drift |
Then read the form. Page one shows whether the quote is locked and until when. It also shows the interest rate, monthly payment, estimated taxes and insurance, and any prepayment penalty. Other pages show total closing costs and estimated cash to close.
Compare total closing costs and cash to close, not just the rate. A lower rate with higher fees can cost you more over the time you actually keep the loan. Every quote also builds costs into either the rate or the balance. That is true even when a lender advertises “no closing costs,” so ask which one it is.
Does shopping hurt your credit? The CFPB says the credit impact is the same no matter how many lenders you consult, as long as your credit checks fall within a short shopping window. Scoring models vary, so keep your shopping tight.
A Loan Estimate is a disclosure, not a contract. Getting one does not commit you to that lender.
A Worked Comparison
Picture two lenders quoting the same cash-out refinance on the same home at 75% LTV, using hypothetical inputs. Lender A shows the lower rate but higher total closing costs. Lender B shows a slightly higher rate and much lower closing costs. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
Say you plan to keep the loan for a short stretch before selling or refinancing again. Lender A’s higher upfront cost has little time to pay itself back, so Lender B can be cheaper overall. Say instead you plan to hold the loan for many years. Now Lender A’s lower rate has time to outrun its fees.
The lesson is that the “better” quote depends on how long you hold the loan. Ask each lender to show total costs, then choose based on your real horizon.
Red Flags and What to Do
- A quote that won’t be put in writing. Ask for a Loan Estimate. If it never arrives, walk away.
- Pressure to decide today. A real offer survives a night of thought.
- A final estimate that doesn’t match the early quote. Ask for each change to be explained line by line.
- An unlocked quote presented as final. If it is not locked, it can change at any time.
- A license that won’t verify. Stop and check the licensing lookup again.
- Vague answers about overlays or seasoning. Ask again, or move on.
Some changes are legitimate. A low appraisal, a credit score change or income that can’t be documented can all trigger a revised Loan Estimate. The point is that the lender should explain why.
Final Check Before You Sign
You receive the Closing Disclosure at least three business days before closing. Put it next to your Loan Estimate and compare loan amount, closing costs, cash to close and the lock status. Anything that moved should have a reason you understand.
Then weigh what you are signing. The CFPB notes a cash-out replaces your old loan with a larger one, so the monthly payment may increase and the payoff date may extend. Your interest rate and other terms change too.
There is also a risk tradeoff. CFPB research notes that converting non-mortgage debt into mortgage debt can put your home at risk of foreclosure if payments become unsustainable.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
When a Different Product Is the Better Move
A cash-out refinance is not the only way to reach your equity. Home equity loans and HELOCs leave your original first mortgage in place, unlike a cash-out refinance. If you hold a first mortgage you like, that can be a reason to keep it. If you only want to change your rate or term and take out little cash, a rate-and-term refinance may fit better. Those have their own leverage rules and only incidental cash back.
Key Terms Defined
Cash-out refinance: A new first mortgage that pays off your current one and gives you the extra equity as cash.
LTV (loan-to-value): The new loan balance divided by the home’s appraised value.
Seasoning: The waiting period before a loan or ownership counts, such as 12 months on the loan being paid off.
Overlay: A rule a lender adds that is stricter than the agency baseline.
Loan Estimate: The standard three-page form that shows a loan’s terms and costs, used to compare offers.
Closing Disclosure: The final form showing actual loan terms and costs, delivered before closing.
Delayed financing: A cash-out refinance on a home you recently bought with cash.
Frequently Asked Questions
How many lenders should I compare?
Three is a sensible number for most borrowers. That gives you enough to spot an outlier without drowning in paperwork. Keep your applications inside a tight window so the credit inquiries are treated together, and make sure each quote is for the same loan type, amount and lock status.
Do I have to use my current lender?
No. Your current lender may offer a convenient path, but nothing requires you to stay. A new lender pays off your existing loan with the new one. Compare the current lender’s Loan Estimate against others like any other offer.
What if the appraisal comes in low?
The appraised value sets your maximum loan, so a low value shrinks the amount you can borrow. It can also trigger a revised Loan Estimate. Ask each lender up front how it handles a low appraisal, and whether you can see the report. You are entitled to a copy before closing.
Is a cash-out refinance the same as a home equity loan?
No. A cash-out refinance replaces your first mortgage with a larger one. A home equity loan or HELOC sits behind your first mortgage and leaves it untouched. That distinction matters most when your current first mortgage has terms you want to keep.
Can I do a cash-out refinance right after buying my home?
Usually not until you have been on title for six months and the loan being paid off is at least 12 months old. Cash purchases are the main exception, through delayed financing, with its own documentation and cap. Inherited homes and some court awards have their own exceptions as well.
If you are weighing a cash-out refinance against keeping the loan you have, Lendmire can help you compare the programs and the equity each one reaches. Reach the team at 828-256-2183.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage broker licensed for consumer lending in 16 states. Lendmire arranges FHA, VA, conventional and jumbo purchase and refinance loans through wholesale lenders; every file is underwritten by the lender under the applicable program guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
1. Fannie Mae Selling Guide B2-1.3-03
2. Fannie Mae Eligibility Matrix
3. FHFA Conforming Loan Limits
4. California DFPI MLO licensing status
5. CFPB Consumer Complaint Database
This article is part of Lendmire’s cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Do You Qualify for a Conventional Cash-Out Refinance? · Is a Conventional Cash-Out Refinance Worth It for Your Home? · Does a Conventional Cash-Out Refinance Go on Your Tax Returns?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
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- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.