When assessing the maximum cash back from a limited cash-out refinance, what is the alternate figure mentioned besides the dollar amount?

In the context of limited cash-out refinances, lenders typically allow the borrower to take cash back from the equity in their home while refinancing their mortgage. The maximum cash that can be received back in a limited cash-out refinance is often limited to a certain percentage of the appraised value of the property.

The figure mentioned, which is typically around 2%, refers to the maximum percentage of the appraised value that can be recaptured as cash back through this type of refinance. Thus, alongside the cash amount, the relevant percentage is significant as it caps the amount a borrower can take out while still complying with lending guidelines.

This structure is designed to balance the borrower's need for cash with the lender's assessment of risk, ensuring that the refinance aids the homeowner but does not extend them beyond a manageable level of debt compared to the value of their home. Understanding this concept helps mortgage professionals guide clients effectively in their refinancing options.