Home equity – the difference between what you owe on your mortgage and what the property is worth – can be leveraged in many ways. One is by doing a cash out refinance, which allows you to trade equity for cash. A cash out refinance can be an appropriate move for homeowners or entities that own investment properties. It’s also a way to access a lump sum of cash from a property to invest elsewhere. What is a Cash Out Refinance? A cash out refinance is when a property owner takes out a new mortgage worth more than their existing mortgage, pays off the old mortgage, and then pockets the difference. The cash they pocket is essentially the difference between what the property owner owes on the former mortgage and what they borrow. There are rules to a cash refinance, so someone can’t go and ask a lender for any amount they want. The amount one can borrow typically hinges on how much equity is in a property. The lender usually limits borrowing to 80% of the value of a property, but that percentage varies