The Quick Read: A conventional cash-out refinance carries the same kinds of fees as any new first mortgage, plus pricing adjustments that depend on the cash-out purpose. You can pay the fees in cash, have them deducted from your proceeds, or roll them into the new loan. Rolled-in fees count against the loan ceiling, so they shrink the cash you walk away with. Every figure below is subject to lender guidelines and full file review.
Key Terms Defined
Closing costs: the one-time charges for creating the new loan and recording it against your home.
Prepaids: money collected at closing for items you owe soon, such as homeowners insurance, property taxes and interest from closing day to the first payment date.
Origination charge: the lender-side fee for taking, processing and underwriting the application.
Loan-level pricing adjustment (LLPA): a risk-based charge set by Fannie Mae. It depends on things like credit score, loan purpose, occupancy and loan-to-value.
Loan-to-value (LTV): the new loan balance divided by the appraised value of the home.
Seasoning: the waiting period the agencies require before a refinance, measured on the existing loan and on your time on title.
Right of cancellation: a short cancellation window after signing a refinance on the home you live in.
Why Does a Cash-Out Refinance Have Fees at All?
Because it is a brand-new first mortgage. The old loan gets paid off and a new one is recorded, so every cost of making and recording a mortgage comes back. Cash-out adds a twist: it also changes how the loan is priced.
A fee on this loan falls into one of three layers:
1. Closing costs. Lender charges plus third-party charges such as the appraisal, title work and recording.
2. Risk-based pricing. The agency adjustments tied to credit score, LTV and the cash-out purpose.
3. Prepaids and escrow funding. Money that is yours, in effect, but that you must bring or finance at closing.
Most people only watch the first layer. The second layer matters more than many borrowers expect, and it never shows up as its own line item.
Lendmire’s cash-out refinance programs run on this same three-layer structure. What changes from lender to lender is how each layer is priced and what overlays sit on top of the agency rules.
Which Fees Show Up on the Loan Estimate?
Expect the categories below on nearly every file. The dollar amounts depend on your lender, loan size, county and state, so read your own estimate instead of relying on a rule of thumb. No official agency percentage exists for “typical cash-out closing costs,” so be wary of any article that quotes one as fact.
| Fee | Who is paid | Scales with loan size? | Varies by state? |
|---|---|---|---|
| Origination / underwriting | Lender | Sometimes | Rarely |
| Appraisal | Appraiser | No, by property | Somewhat |
| Credit report | Credit bureau | No, flat | No |
| Title search and insurance | Title company | Yes | Yes |
| Recording and transfer charges | Local government | Varies | Yes |
| Flood certification | Third party | No, flat | No |
| Prepaids and escrow funding | Insurer, tax authority, servicer | By your bills | By county |
Two items deserve a second look. Title insurance and government recording charges swing the most from one state to the next. Prepaids look like fees but are your own future expenses paid early.
Think of it as a loan with a flat piece and a scaled piece. Flat fees such as the credit report do not grow with your balance. Fees such as title insurance do. That is also why small loans tend to cost more as a share of the balance.
What Is the Cost That Never Gets Its Own Line?
It is the pricing adjustment. Fannie Mae assesses LLPAs on features of the loan, including credit score, loan purpose, occupancy, number of units and product type, and publishes them in the Fannie Mae LLPA matrix. That matrix has separate grids for purchase, limited cash-out and cash-out loans. The same house can price differently depending on which grid applies.
The charge is technically one-time. Most borrowers do not write a check for it, though. It is usually folded into the interest rate, so you feel it as a slightly higher rate over the life of the loan. The Selling Guide also says LLPAs come in addition to any other price adjustments that apply.
Here is the practical takeaway. A cash-out loan can price noticeably worse than a rate-and-term loan on the same home with the same credit. Higher LTV and lower credit scores generally widen the gap. The grid changes over time, so ask your broker for the current version rather than trusting a number you saw months ago.
You will not see “LLPA” printed on your estimate. You will see its effect in the overall pricing and in any lender credits. When you compare offers, compare the full package (pricing, credits and fees together), not just the closing-cost total.
Three Ways to Pay the Fees
You decide how the fees get paid, and each route moves a different number.
| Method | Effect on cash received | Effect on loan balance |
|---|---|---|
| Pay out of pocket | Unchanged | Unchanged |
| Deduct from proceeds | Lower | Unchanged |
| Finance into the loan | Lower | Higher |
Financing is allowed. Fannie Mae’s Selling Guide section on cash-out refinances lets the new loan pay off the existing first mortgage and also cover closing costs, points and prepaid items. The catch is that everything sits inside the same maximum LTV.
This is the point where the “rolled in for free” idea falls apart. Financed fees are not free. They enlarge the balance, they use up borrowing room, and they leave you with less spendable cash.
Marketing terms like “no-closing-cost” refinance work the same way. The costs still exist. They are built into the interest rate or added to the balance, not removed.
How Do Fees Compete With Your Cash for the Same Room?
Your cash and your fees come out of one shared ceiling. Here is the walk, using modeled units, not market data. The numbers are assumptions chosen to show the mechanics. They are not typical results.
Assume a one-unit primary home, where the cash-out ceiling is 80% LTV. Say the existing mortgage is 55 units against a home value of 100 units. Call the financed costs “F.” Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
| Step | Base case | Low appraisal | Fees financed |
|---|---|---|---|
| Appraised value | 100 | 95 | 100 |
| Ceiling at 80% | 80 | 76 | 80 |
| Existing mortgage payoff | 55 | 55 | 55 |
| Room before fees | 25 | 21 | 25 |
| Costs financed | 0 (paid in cash) | 0 (paid in cash) | F |
| Net cash to you | 25 | 21 | 25 minus F |
Two lessons come out of this table. A lower appraisal cuts your cash faster than any fee does, because the ceiling is applied to appraised value, not to what you hoped the home was worth. And financing costs does not add loan room. It subtracts from the cash you receive.
Worth knowing: if you need a specific amount of cash, work backward. Start with the ceiling, subtract the payoff, subtract the fees you plan to finance, and see whether the leftover covers your goal.
Lendmire’s own piece How Much a Conventional Cash-Out Refinance Lends on a Primary Home goes deeper on the ceiling side of that walk.
What Changes When It Is the Home You Live In?
Owner-occupancy gives you the best leverage in the conventional cash-out lane. A one-unit principal residence reaches 80% LTV. Two- to four-unit principal residences, second homes and investment properties sit at 75%. Occupancy decides the leverage, and that single cap drives most of the cash-out math above. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
On the pricing side, occupancy is one of the features the LLPA grid reads, so your estimate for a primary home is not the same as one for a second home. Compare like with like.
Seasoning also applies. The first mortgage being paid off must be at least 12 months old, measured note date to note date. At least one borrower must also have been on title for six months. These are two separate clocks, and meeting one does not satisfy the other.
If you own a two- to four-unit building and live in one unit, the rules shift. Lendmire’s article Conventional Cash-Out Refinance Requirements on a 2-4 Unit Primary Home walks through them.
Credit and ratios matter here too. Across the wholesale conventional programs Lendmire places files with, the floor starts at a 620 decision score, and the automated finding governs most files, with a total ratio ceiling of 50%. A wholesale lane also exists that reaches 89.99% LTV with no mortgage insurance on a primary residence at a 680 score, a 50% ratio and a thirty-year fixed on a conforming balance. It carries its own six months of seasoning, and it is not written on a Texas homestead, where the state constitution caps cash-out at the agency figure. Everything stays subject to lender guidelines.
Where Do the Rules Bend?
The 12-month rule has named exceptions, and a few other situations trip people up. Check the current guide text before you rely on any of them.
- Delayed financing. This is the exception to the six-month title wait. It lets a borrower who bought with cash refinance sooner, with the new loan limited by the documented initial investment plus financed costs. The archived guide text also requires an arm’s-length original purchase.
- Inheritance and legal awards. No waiting period applies when the property came through inheritance or a legal award, such as a divorce, a separation or the end of a domestic partnership.
- A paid-off home. No lien does not mean no cash-out rules. A new first mortgage on a home with no mortgage against it is still treated as cash-out.
- Student loan cash-out. A special feature code lets you pay off student loans from proceeds. Fannie Mae prices it with the limited cash-out grid, not the cash-out grid.
- Rate buydowns. Cash-out is not eligible with a temporary interest rate buydown.
- Down payment assistance. Community Seconds are not permitted with cash-out refinances.
- Previously listed homes. On the rate-and-term side, a home that was listed for sale must be off the market by the disbursement date.
The rate-and-term version of this loan, called a limited cash-out refinance, has a higher LTV ceiling. On a one-unit primary home it reaches 95%. Only incidental cash back is allowed. Too much cash back reclassifies the loan as cash-out, which brings the lower ceiling and the extra pricing. Check the current limited cash-out section for the exact threshold before you plan around it.
Reserves can also come into play. When the debt ratio runs high on an automated approval, the Eligibility Matrix notes say minimum reserves apply on cash-out. Plan for some liquid assets after closing.
In practice, the borrowers who get surprised are usually the ones who counted six months on title and forgot the 12-month clock on the old loan.
How Do State Rules and Paperwork Affect the Total?
State rules change the fee picture more than most borrowers expect. Attorney states add legal fees to closing. Transfer and recording charges differ by county. Some states restrict how much equity you can pull from a homestead, and Texas is the clearest example in the conventional lane. Ask your broker which of these apply where you live, and have them point to the line on your estimate.
The paperwork follows a set order. You receive a Loan Estimate, then a Closing Disclosure before closing. The CFPB’s Loan Estimate guide explains the layout, including the Loan Costs and Other Costs sections and the Estimated Cash to Close line. Put the final disclosure next to the latest estimate and question any line that moved.
Check these lines when you reconcile the Loan Estimate and the Closing Disclosure:
- Origination and underwriting charges.
- Any lender credits.
- Title and recording charges.
- The line showing closing costs financed into the loan.
- Estimated Cash to Close, which shows what you pay or receive.
Because this is a refinance of the home you live in, you also get a right of rescission. That is a short cancellation window after signing. Funds are not released until it ends, so plan any big payment, like a contractor deposit, around that.
How Do You Compare Offers and Push Back on Fees?
Compare full Loan Estimates from more than one lender or broker on the same day, same loan amount and same cash goal. Then work through this list:
- Ask which charges are the lender’s and which belong to third parties.
- Ask which pricing charges on the quote are optional.
- Ask what the pricing would look like with fees paid in cash versus financed.
- Ask whether a different LTV tier changes pricing. A lower balance can price better, and above 80% LTV mortgage insurance enters the picture.
- Ask which fees can be shopped, such as title services where the rules allow it.
Origination charges are often the most negotiable line. Appraisal and government charges are not. A quote that looks cheap on closing costs may carry its cost in the pricing instead, so judge the whole package.
Is the Cash Worth What It Costs?
A cash-out refinance is not mainly about recouping fees through a lower payment. The better question is what the cash costs you. You are replacing your whole mortgage, not just borrowing against equity, and the new loan carries the cash plus any financed fees. That raises the balance and can raise your debt ratio.
Compare the alternatives on the same footing. A home equity loan or a HELOC leaves your first mortgage in place. That can matter a great deal if your current loan has a rate you want to keep. A cash-out refinance can make sense when the new first mortgage is a good deal on its own merits, or when you need a larger sum than a second lien would provide.
Repeat borrowing has a cost. Each new cash-out round adds a new set of fees and restarts the clock on the first-mortgage seasoning.
There is also risk. The CFPB’s research on cash-out refinances notes that cash-out replaces the first lien, which is the key difference from a home equity loan. Paying off credit cards with home equity trades unsecured debt for debt secured by your house. If payments become hard to sustain, the home is what is at risk.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
Where to Go From Here
Start with your goal, not the fee list. Decide how much cash you need, then work out the payoff, the ceiling and the likely financed fees. 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. Qualification and terms are subject to lender guidelines and a full file review, and nothing here is a commitment to lend.
Frequently Asked Questions
Are cash-out refinance closing costs the same as on a purchase?
The categories are largely the same: lender charges, appraisal, title, recording and prepaids. The pricing is not. Cash-out loans are priced from their own grid, so the same borrower can see a different pricing result than on a rate-and-term loan. Compare your own Loan Estimate, since no agency publishes a standard percentage.
Can I roll the fees into the new loan?
Yes. A conventional cash-out loan may finance closing costs, points and prepaid items. They count against the maximum LTV, so every financed fee reduces your net cash and raises your balance. Whether the extra balance is worth it depends on how much cash you need and how it affects your debt ratio.
Why did my cash come in lower than I expected?
Usually one of two reasons: a lower appraisal or a larger payoff than you remembered. Financed fees can also play a part. The ceiling is applied to appraised value. Whatever is left after the payoff and costs is your cash. Re-run the walk with the final numbers on the Closing Disclosure.
Do I need to wait before doing a cash-out refinance on my home?
Usually yes. The first mortgage being paid off must be at least 12 months old, and at least one borrower generally must have been on title for six months. Exceptions exist for delayed financing, inheritance and legal awards. Treat the two clocks separately.
Can I cancel after I sign?
On a refinance of the home you live in, yes, within the right-of-rescission window. Funds are released after it ends. This protection does not apply the same way to second homes or rentals.
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.
For the program’s current guidelines, see conventional loan programs.
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References
2. Fannie Mae Selling Guide B2-1.3-03, Cash-Out Refinance Transactions
3. Fannie Mae (document 20786)
4. CFPB Loan Estimate explainer
5. CFPB’s research on cash-out refinances
This article is part of Lendmire’s cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Conventional Cash-Out Refinance Costs for a Primary Home · How to Do a Conforming Cash-Out Refinance on a Primary Home · Can You Cash Out Refinance a Vacation Home Under Conventional Rules?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.