A cash-out refinance replaces your mortgage with a larger one and hands you the difference in cash — for renovations, paying off high-interest debt, or your next investment. But here's the honest part most lenders skip: if you have a low rate on your current mortgage, a HELOC may serve you far better. Beto runs both and shows you which actually costs less.
If you locked a low mortgage rate a few years ago, a cash-out refinance replaces that whole loan at today's higher rate. Sometimes that's still the right move — and sometimes it's an expensive mistake.
You take $60k out — but to do it, your entire $300k balance jumps from a 3% rate to today's rate. The new cash is small; the cost of re-pricing the whole loan is huge. That's the math nobody runs for you.
A HELOC leaves your low-rate first mortgage untouched and only charges interest on the equity you actually use. When your current rate is well below market, that's usually the cheaper path. See HELOC options →
Both turn equity into usable money. The right one comes down to one big question: how good is the rate on your current mortgage?
One new, larger loan pays off your old one and gives you the difference in cash. One payment, often a fixed rate on the whole balance.
A separate line behind your existing mortgage. Your low first-mortgage rate stays, and you only pay interest on what you draw.
In Texas there's an extra wrinkle: you generally can hold only one home-equity lien at a time on your homestead, so it's usually one or the other — which makes choosing right the first time even more important. Beto runs the actual numbers both ways.
It's a refinance with a twist: the new loan is bigger than what you owe, and the extra comes to you.
An appraisal sets the current value, which determines how much equity you can tap.
In Texas, the new balance can go up to 80% of the home's value.
The new loan clears your existing mortgage; what's left over is your cash.
You walk away with a lump sum and one new monthly payment.
Texas has some of the strongest homeowner safeguards in the country for tapping home equity. They're worth knowing — they shape what's possible and the timeline.
Your total mortgage debt can't exceed 80% of the home's value — you keep at least 20% equity. This applies to your homestead regardless of loan program.
By law, you receive disclosures and then wait a full 12 days before closing. There's no waiver — anyone claiming otherwise is wrong.
You can take only one cash-out per year on your homestead, with a ~6-month seasoning period after purchase before the first one.
Texas 50(a)(6) cash-out applies to your primary residence. Tapping equity on a rental or second home takes a different (non-homestead) route.
Texas generally allows one home-equity lien on a homestead — so it's a cash-out or a home-equity HELOC, not both at once.
Lender fees are capped at 2% of the loan (bona fide third-party costs like appraisal, survey, and title are excluded).
Rules differ by program and change over time, and not every loan type allows cash-out in Texas. Beto confirms exactly what your situation allows before you start the clock.
Cash-out funds are yours to use however you choose. The most common — and most worthwhile — reasons homeowners tap equity:
Roll high-interest credit cards into a lower mortgage rate and free up monthly cash flow.
Fund a remodel or addition — often increasing the home's value as you go.
Use equity as a down payment on a rental or your next property — putting idle value to work.
Tuition, medical costs, a business need — large one-time expenses at mortgage rates.
A cash-out refinance is underwritten like a purchase loan, with equity as the headline. Here's the typical shape for a Texas homestead.
Want to tap equity in a rental property instead? That's a separate, non-homestead cash-out — often a DSCR cash-out for investors. Beto handles those too.
With years of San Antonio appreciation behind them, many owners have more equity than they realize. If that's you, there's likely a smart way to use it.
Carrying high-interest cards or loans? Folding them into your mortgage can cut your total monthly outlay significantly.
Planning a major remodel? Cash-out funds the project at mortgage rates, often adding value back to the home.
Turn dormant equity into a down payment, business capital, or your next opportunity.
If today's rate is at or below yours, cash-out can free up equity and improve your loan at the same time.
Alberto Moravia — Beto the Broker — is a licensed mortgage broker, TREC Certified Instructor, and proud San Antonio resident who will tell you the truth even when it costs him a deal: if a HELOC beats a cash-out for your situation, that's what he'll say.
As an independent broker at Edge Home Finance LLC, Alberto shops across 100+ wholesale lenders and runs the cash-out-versus-HELOC math side by side, factoring in your current rate, your goal, and the Texas rules — so you keep more of your equity working for you. In English, Spanish, or Portuguese.
A free 10-minute call with Beto. Share your current rate, balance, and what you need the cash for — he'll run cash-out versus HELOC side by side, factor in the Texas rules, and show you the option that costs you the least. Honest math, no pressure.