Cash-out refinance

What actually happens

The lender appraises the house and underwrites credit, income, and debt ratios. At closing the new lender pays off the old mortgage, pays closing costs, and wires the rest. The new loan amortizes at today’s rate, usually over 15 or 30 years.

Cash received = new loan amount − old payoff − costs. You keep title and future appreciation. You also restart the first lien on a larger balance.

When the math fails

If the existing first mortgage is at 3% and the new loan is at 6.5%, you are repricing the balance you already owe, not just the cash you take. A second lien leaves the cheap first mortgage alone. That is the comparison that matters in a high-rate market.