Episode 170: What is a Cash-Out Refi and How Does it Work?

Posted Jul 29, 2021 | Chris Petrie

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Listen on the Podcast

On the show today I am breaking down the Cash-Out Refinance strategy.

Many people are noticing a high uptick in the value of their homes, and with this uptick in value comes an increase in home equity.

So what can you do with the equity in your home, how does it work, and what are the risks?

In this episode I am going to break down:

  • How to calculate your home’s equity
  • How much of the equity you can actually tap into
  • The process of of a cash-out refinance
  • Reasons for going with a cash-out refi
  • The risks the banks forge to tell you about

How to Determine Home Equity

The equity you have in your home is equal to the appraised value of your home minus any first or second mortgage, or any other liens you have on your home.

Example of Home Equity Calculation

Current Appraised Value

$400,000 –

Current Home Mortgage

$215,000 =

Home Equity Amount


Example of Cash-Out Refinance

Appraised Value

$400,000 X

Loan to Value

80% =

New Mortgage Amount

$320,000 –

Current Mortgage

$215,000 =

Cash Out Refinance


Thanks so much for listening to the show and if you feel the content of this podcast was helpful, please subscribe to the podcast where you listen and leave a review!

Today’s show was brought to you by OneAZ Credit Union — my very own credit union I have been proud a member of since 2011. 

If you live in Arizona and are looking for a large credit union with a local, customer-focused feel for your personal or business banking needs, look no further than OneAZ Credit Union.

Chris Peach Author 150x150

Chris Petrie

Chris (Peach) Petrie is a personal finance expert, money coach, speaker and podcaster.

In 2011, Chris and his family were exhausted from living paycheck-to-paycheck and facing a mountain of debt. They started going against the society standards of misbehaving with money and made the decision to take back control of their lives and money. Within seven months they paid off $52,000, started saving like crazy and began building real wealth.

The word spread fast and Chris started showing friends how to create a budget over dinner. Soon after he started showing their friends how to do the same and eventually Chris started teaching personal finance classes around the community. As the need for the classes grew, Chris launched Money Peach in 2015.

Money Peach was created to help everyday people remove the stress and fear of money by showing them how to save more, make more, and keep more of their money.

Chris Peach has been featured in places like Business Insider, The Huffington Post, Elite Daily, and CheddarTV.

When Chris isn’t at “work” he can be found at the Crossfit gym or riding on the fire truck — Chris is also a full-time firefighter in Phoenix, Arizona.

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