Homeowners who use a cash-out refinance for renovations should weigh the pros, cons and alternatives before tapping into home equity.
NEW YORK – Annual spending on home improvements has been down in recent years, but that's expected to change in 2025 with a 1.2% increase in renovation spending, according to a report by the Joint Center for Housing Studies of Harvard University. Making strategic improvements can substantially enhance your home's value.
If you don't have the savings to cover the project — or don't want to deplete them to do so — it's worth exploring how refinancing your mortgage can help pay for it. Refinancing for home improvement involves a specific type of transaction, called a cash-out refinance.
How to refinance
In a cash-out refinancing (cash-out refi for short), you replace your existing mortgage with a larger home loan, taking the difference out in ready money. The amount you can get is based on your home's worth and how much of it you actually own. Most lenders require that the size of your new loan equals no more than 80% of the home's value, a figure known as the loan-to-value (LTV) ratio.
Read more: https://www.floridarealtors.org/news-media/news-articles/2025/05/funding-renovations-home-equity