How a cash-out refinance works in Florida

One loan replaces another, and the difference is cash

Mechanically, a cash-out refinance is a full new first mortgage. The new lender pays off your existing loan, covers the transaction's costs if you finance them, and wires you the remainder. You leave with one loan, one payment, and a check. Fannie Mae's Selling Guide defines the acceptable uses: paying off the existing first mortgage, paying transaction costs, retiring certain other liens, and taking equity out as cash.

The word 'refinance' undersells what is happening. Your old loan — its rate, its remaining term, its accumulated principal progress — is extinguished. Everything about the new loan is repriced at today's market for your credit profile, your equity position, and the cash-out feature itself. If your existing rate is meaningfully better than what the market offers now, that trade is the largest cost in the deal, and it never appears on a fee sheet.

Loan-to-value: the cap on the check

Loan-to-value, or LTV, is the new loan amount divided by the appraised value of the home. A $300,000 loan on a $400,000 house is 75 percent LTV. Every loan program sets a maximum LTV for cash-out transactions, and it is lower than the maximum for a purchase or a rate-and-term refinance because lenders treat equity extraction as added risk.

The arithmetic runs backward from the cap: maximum loan equals appraised value times the program's LTV limit, and your cash is that maximum minus the payoff of your current loan minus any financed costs. The specific limits vary by program, property type, and occupancy, and they change — check the current figures in the agency guides or ask when you get quoted. The appraisal matters as much as the cap: every dollar of appraised value moves the maximum loan by the LTV fraction of a dollar.

Closing costs apply to the whole loan — and Florida adds taxes

This is the part that surprises people. The CFPB's inventory of mortgage costs — origination, points, appraisal, title insurance, recording — is calculated on or scaled to the full new loan amount, not the cash portion. Take $50,000 out of a home with a $250,000 balance and you are paying transaction costs on a roughly $300,000 loan.

Florida then adds two state taxes on the new financing: documentary stamp tax on the promissory note and nonrecurring intangible tax on the recorded mortgage, both levied per dollar of the new obligation. The Florida Department of Revenue publishes the rates. Because both scale with the whole new balance, extracting a small amount of cash through a full refinance can be an expensive way to borrow — which is exactly the comparison a home equity line deserves to win or lose on paper, not by default.

• Cash received = (appraised value × program LTV cap) − current payoff − financed costs
• Fees and Florida taxes scale with the full new loan, not the cash-out portion
• A stronger appraisal raises the cap; a weak one shrinks the check

What lenders look at

Cash-out refinances are underwritten as thoroughly as purchases: full credit review, income documentation, an appraisal, and program rules on top. Fannie Mae's guide, for example, imposes requirements on how long you have owned the property and how long the existing loan has been in place before a cash-out is eligible — seasoning rules that change over time, so verify the current ones rather than assuming.

Pricing also carries loan-level adjustments for the cash-out feature that scale with LTV and credit score. Two borrowers with identical balances can be quoted differently because one is classified cash-out and the other rate-and-term. That classification line — and why it is worth planning around — gets its own article in this library.

Where we fit

Wholesale Mortgage Lending is a mortgage brokerage. We do not make or approve loans, and we do not set the LTV caps or the prices — lenders and the agencies do. What a broker adds on a cash-out is shopping the same scenario across multiple wholesale lenders and putting the results side by side: cash received, total costs including Florida taxes, new payment, and the rate you are giving up. If a home equity line or a smaller loan serves the goal better, the comparison should show that too. Education first; the decision is yours.