Rant: Just learned cash out refi rates are way higher than I thought

So I was looking into pulling equity from my house in Atlanta to fix up the kitchen, and I nearly signed papers without checking the fine print. Turns out the average rate for a cash out refi is like 0.5% to 1% higher than a standard rate lock, at least according to Bankrate's latest chart from last week. I had no idea the spread was that big, I figured it was basically the same thing with extra paperwork. My lender didn't even mention it upfront, I had to dig through their disclosure PDF to find the exact number. Has anyone else run into this where the rate surprise hit you mid application?

2 comments

2 Comments

evan_jenkins11d agoMost Upvoted

Man I heard about this on a housing podcast. They said cash out refis are basically riskier for the bank so they charge more. Makes sense I guess but still stings. I saw a chart from Freddie Mac showing the gap has been getting bigger since 2022. Not a fun surprise when you're already budgeting for renovations.

jones.brooke11d ago

Oh come on. Is a half point really that big a deal in the grand scheme? You're already dropping thousands on a kitchen remodel, makes sense the bank wants a little extra on their end too.