Austin homeowners are sitting on a lot of equity right now. Even after the market correction from 2022 peaks, most people who bought before 2023 have seen serious appreciation. And a lot of them are asking me the same question: should I do a cash-out refinance?
The honest answer: it depends. A cash-out refi can be one of the smartest financial moves you make — or one of the most expensive. The difference comes down to math, timing, and what you're using the money for.
Let me walk you through how it works in Texas, what it actually costs, and when I tell clients to go for it versus when I tell them to hold off.
How a Cash-Out Refinance Works
A cash-out refinance replaces your existing mortgage with a new, larger loan. The difference between what you owe and the new loan amount comes to you as cash at closing.
Simple example: your home is worth $500,000 and you owe $250,000. You refinance into a new $375,000 mortgage. After closing costs, you walk away with roughly $115,000–$120,000 in cash. Your old mortgage is paid off. You now have one new payment on the bigger loan.
That's it. No second lien. No HELOC payment. One mortgage, one payment.
Texas Has Its Own Rules
This is where Austin homeowners need to pay attention. Texas has constitutional protections on home equity lending that are stricter than most states:
- 80% LTV max: You must retain at least 20% equity after the cash-out refi. No exceptions. This is a Texas Constitution requirement (Article XVI, Section 50), not just a lender guideline.
- 12-month cooling period: If you've already done a Texas cash-out refi, you must wait 12 months before doing another one.
- Attorney requirement: Texas Section 50(a)(6) loans require an attorney to be involved in closing. This adds a small cost but is non-negotiable.
- "Once a cash-out, always a cash-out": In Texas, once a property has had a Section 50(a)(6) cash-out refi, every future refinance on that property is permanently classified as a cash-out transaction — even if you're not taking additional cash. The 80% LTV cap stays with the property.
- No prepayment penalty: Texas law prohibits prepayment penalties on home equity loans. You can pay it off or refinance again anytime without a fee.
These rules exist to protect homeowners. They also mean the process takes a little longer than a standard rate-and-term refinance — typically 30–45 days.
What It Costs Right Now
Cash-out refinance rates run slightly higher than standard refinance rates — usually 0.125% to 0.50% more, depending on your credit score, LTV, and loan amount. In March 2026, that puts most conventional cash-out refis in the upper 6% to low 7% range.
Closing costs typically run 2%–3% of the new loan amount. On a $400,000 loan, expect $8,000–$12,000. This includes appraisal, title insurance, lender fees, and the Texas attorney requirement.
The good news: most of these costs can be rolled into the loan. You don't necessarily need cash at closing to do a cash-out refi.
Want to run the numbers on your specific situation? Use the mortgage calculator to model different scenarios, or request a refinance quote and I'll build the analysis for you same day.
When a Cash-Out Refi Makes Sense
I've closed hundreds of cash-out refinances. Here's when the math works:
Debt consolidation. If you're carrying $40,000 in credit card debt at 22% interest, converting that to a 7% mortgage payment saves you real money every month — and you get one payment instead of five. The break-even on closing costs is usually under a year.
Home improvements that add value. A kitchen remodel or ADU addition in Austin can return 70–100% of the investment at resale. Financing it through your mortgage at 7% beats a personal loan at 12% or a contractor financing plan at 15%.
Investment opportunities. Some clients use cash-out proceeds for a down payment on an investment property or to fund a business. This is higher-risk, but the cost of capital is lower than most alternatives.
When I Tell Clients to Wait
Your current rate is lower than what's available. If you locked in a 3.5% rate in 2021 and you'd be refinancing into a 7% rate, you need a very compelling reason to give up that rate. The interest cost difference over 30 years is massive. Consider a HELOC as a second lien instead — you keep the low first mortgage and add a smaller line of credit for what you need.
You're using the cash for depreciating assets. Buying a boat or a car with your home equity is almost never the right call. You're converting 30 years of payments into something worth half its value in 5 years.
You're planning to sell within 2 years. Closing costs need time to pay for themselves. If you're selling soon, a HELOC or even a personal loan might be cheaper when you factor in the refi costs.
The Process — What to Expect
- Application and pre-approval: I pull your credit, verify income, and calculate your maximum cash-out amount based on your home's estimated value. This takes 24 hours.
- Appraisal: A licensed appraiser visits your property to confirm value. In Austin right now, appraisals are coming back reliably — not the inflated comps of 2021 but solid, supportable values.
- Underwriting: The lender reviews everything — income, assets, credit, property. As a broker with 40+ wholesale lenders, I match your file to the lender with the best rate and terms for your situation.
- Closing: Texas requires attorney involvement for cash-out refis. You sign, the old mortgage gets paid off, and funds hit your account — usually within 3 business days of closing.
Start to finish: 30–45 days. I've done it faster when the file is clean.
FAQ: Cash-Out Refinance in Austin TX
How much equity do I need for a cash-out refinance in Texas?
You must retain at least 20% equity after the refi — that's Texas law, not just a lender preference. If your home appraises at $500,000, the max new loan is $400,000. Subtract what you currently owe and that's your available cash.
What are cash-out refinance rates in Austin right now?
In March 2026, conventional cash-out refis are running in the upper 6% to low 7% range for well-qualified borrowers. Your exact rate depends on credit score, LTV, and loan amount. I shop 40+ lenders on every file to find the best pricing.
How long do I have to wait before doing a cash-out refinance?
Most conventional lenders require 6 months of ownership. Texas adds its own 12-month waiting period if you've already done a Section 50(a)(6) cash-out loan. FHA cash-out requires 12 months of on-time payments on the existing loan.
Can I use a cash-out refinance to pay off debt?
Yes — debt consolidation is the most common reason I see. Trading 22% credit card debt for a 7% mortgage payment saves real money every month. Just make sure you do the break-even math and commit to not running up the cards again.
What are the closing costs on a cash-out refinance in Texas?
Typically 2%–3% of the new loan amount. On a $400,000 loan, that's $8,000–$12,000. This can usually be rolled into the loan so you don't need cash out of pocket. Texas also requires an attorney at closing for cash-out refis, which adds a small fee.
If you're sitting on equity and wondering whether a cash-out refi makes sense right now, let's run the numbers together. No pressure, no obligation — just math.
Talk soon,
Adam Styer
Adam Styer | Mortgage Solutions LP
NMLS# 513013 | (512) 956-6010