What Is a Cash-In Refinance?

Published on Sep 25, 2025 | Refinancing a Home

A cash-in refinance is when you bring additional money to the closing table to pay down part of your loan balance while refinancing. Instead of pulling equity out (as in a cash-out refinance), you’re using cash to reduce your loan-to-value ratio (LTV).

Why Do Homeowners Consider It?

There are several potential benefits:

Lower Interest Rates: A reduced loan amount often qualifies you for better mortgage rates. In fact, recent data from the Mortgage Bankers Association shows cash-in refinancers lowered their rate by an average of 0.82%.
Remove PMI: By bringing your LTV under 80%, you can eliminate private mortgage insurance, saving you money each month.
Avoid Being Underwater: If your home’s value has dropped, cash-in refinancing can help restore equity and improve your financial standing.

What Are the Risks?

While the benefits are clear, it’s not the right fit for everyone. Here’s what to consider:

Opportunity Cost: That extra cash could potentially earn more elsewhere, like in investments or retirement accounts.
Reduced Liquidity: Once the money is in your mortgage, it’s tied up. It’s not easy to access again without another refinance or a home equity loan.
Potential Tax Impacts: By reducing your loan amount, you may lower your deductible mortgage interest — which could impact your tax situation.

Is Cash-In Refinance Right for You?

Ask yourself these key questions:

Do you plan to stay in your home long term?
Are your finances stable with enough emergency savings?
Are you focused on lowering your total interest paid or eliminating PMI?

If you answered yes, cash-in refinancing might be worth a closer look.

Wondering if a cash-in refinance makes sense for you? Let’s review your equity, goals, and loan options to see if it’s a smart move. Contact me today.

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