Cash-Out Refinance for Home Renovations in Michigan: What Homeowners Should Know

March 6, 2026 / jpalmortgage /

Cash-Out Refinance for Home Renovations in Michigan: What Homeowners Should Know

If you’re planning home improvements and wondering how to pay for them, a cash-out refinance may be one of the most flexible options available.

Many Michigan homeowners have built significant equity in their homes over the past several years. A cash-out refinance allows you to tap into that equity and use it to fund renovations, upgrades, or repairs.

Instead of using high-interest credit cards or personal loans, you may be able to finance your improvements at mortgage interest rates.

Let’s walk through how this works and when it makes sense.

What Is a Cash-Out Refinance?

A cash-out refinance replaces your current mortgage with a new, larger loan. The difference between the new loan amount and your existing mortgage balance is paid to you in cash at closing.

Example:

  • Home value: $400,000

  • Current mortgage balance: $240,000

  • Maximum loan (80% of value): $320,000

Potential cash available:

$80,000 (before closing costs)

That money can then be used for home renovations or other financial goals.

Why Many Michigan Homeowners Use Cash-Out Refinancing for Renovations

Home improvements are one of the most common reasons people use a cash-out refinance.

Some popular renovation projects include:

  • Kitchen remodels

  • Bathroom renovations

  • Basement finishing

  • Roofing or siding upgrades

  • Deck or patio construction

  • Energy-efficient improvements

  • Adding living space or in-law suites

These projects can improve both your lifestyle and your home’s long-term value.

Renovations That Often Add the Most Value

If you’re renovating with resale value in mind, some projects historically provide strong returns.

Common high-value upgrades include:

Kitchen renovations
Modern kitchens are one of the biggest drivers of home value.

Bathroom upgrades
Updated bathrooms improve comfort and buyer appeal.

Finished basements
Very popular in Michigan homes and can add significant usable living space.

Energy efficiency improvements
New windows, insulation, or HVAC systems can reduce long-term costs.

Outdoor living spaces
Decks, patios, and landscaping are highly desirable in many Michigan markets.

While no renovation guarantees profit, smart upgrades can increase both enjoyment and equity.

How Much Equity Do You Need?

Most conventional cash-out refinances allow homeowners to borrow up to:

80% of their home’s value

That means you typically need to keep at least 20% equity in the home after the refinance.

Example:

  • Home value: $350,000

  • Maximum loan (80%): $280,000

  • Current mortgage: $210,000

Potential renovation funds:

About $70,000

A professional appraisal will determine the final value used in the loan.

Why Some Homeowners Choose a Cash-Out Refinance Instead of Other Financing

There are several ways to finance renovations, including:

  • Home equity loans

  • HELOCs (home equity lines of credit)

  • Personal loans

  • Credit cards

  • Contractor financing

A cash-out refinance can be appealing because it may offer:

  • Lower interest rates than unsecured loans

  • One simple monthly payment

  • Longer repayment terms

  • The ability to restructure your entire mortgage

However, it’s important to evaluate the full picture — especially if your current mortgage rate is lower than today’s rates.

When a Cash-Out Refinance Makes the Most Sense

This strategy often works best when:

✔ You have strong home equity
✔ Your renovation improves property value
✔ You’re planning to stay in the home long-term
✔ You want to consolidate multiple debts into one payment

It may be less attractive if you recently locked in a very low mortgage rate and only need a small renovation budget.

Renovating Homes in Michigan: Local Considerations

Michigan homes often have unique renovation needs due to our weather and housing stock.

Common projects homeowners finance include:

  • Roofing and siding upgrades due to winter weather

  • Basement waterproofing or finishing

  • Insulation and window improvements

  • Garage additions

  • Lake home or cottage updates

How JPAL Mortgage Helps Michigan Homeowners Use Their Equity

Every homeowner’s situation is different.

At JPAL Mortgage, we take a consultative approach and help you evaluate:

  • Your estimated home value

  • Available equity

  • Cash-out refinance limits

  • Monthly payment changes

  • Long-term interest costs

Sometimes a cash-out refinance is the right move. Other times, a home equity line of credit or another strategy may make more sense. 

Our goal is simply to help you make the smartest financial decision.

Because at JPAL Mortgage, we strive to be your best friend in home finance.

Ready to explore if a Cash-Out Refinance makes sense for you?

JPAL Mortgage is here to help Michigan families refinance homes together with clarity, confidence, and the best possible loan options.

Call us at 616-465-5725; Email us at hello@jpalmortgage.com

Or fill out a contact form here: Let’s Connect!

Trusted by Your Neighbors Across the State of Michigan

  • Over 30 years in combined banking and mortgage experience
  • 80+ five-star Google reviews
  • Pioneers of the “Unbeatable Mortgage Experience”
  • Born and raised in Michigan and proud Michiganders!

What Your Neighbors Say

“Jeremy helped us with the purchase of our very first home. He was extremely helpful throughout the entire process. He answered every question we had – big or small – as if it was the most important thing he could be doing in that moment. He made us feel very cared for and was extremely efficient at giving us updates along the way. Do not question your choice to work with Jeremy! We are so glad we did.” -Justine L.

★★★★★

“Adam Leavesley was referred to me by a trusted friend, and he came in clutch with the right advice and help to make getting approved, getting the loan and purchasing this home all possible in a very short period of time. During the whole process I felt comfortable and secure knowing that there was a great team helping my family out in a real time of need. That meant the world! Thanks to everyone at JPAL, Peace and Love.” -Brandon J.

★★★★★

“JPAL Mortgage was the most wonderful experience we have ever had in purchasing a home! They constantly kept us apprised of the progress in securing the loan and working a miracle in closing on our home in a 2 week time period. Jeremy Pins especially, was a joy to work with. Nothing was impossible for him to accomplish. Jeremy’s knowledge, experience, guidance, and advice on the direction we should consider in a very difficult financial climate was absolutely amazing! If/when we plan to purchase another property, JPAL will be the only company we will consider.  We will recommend to anyone in the market to purchase property, JPAL are true ‘miracle workers’!” -Michael S.

★★★★★

“Adam is AMAZING! The “ old style” service was fantastic! Adam’s enthusiasm is infectious, and the genuineness is evident. Adam made our mortgage/finance experience incredibly easy and fast. Adam will help you every step of the process with extreme detail along with his expertise will ensure you will get the best results with someone you can trust, like Adam.” -Janae A.

★★★★★

JPAL Mortgage is proudly based in Michigan, where its two owners were born and raised! We love this state and have traveled it far and wide. It’s a passion of ours to help make a smooth landing here in Michigan! Learn more about the team at JPAL

Let’s Connect!

JPAL Mortgage – Your best friend in home finance.

All loans require complete underwriting approval, including satisfactory appraisal and clear title work. Interest rates and closing costs are subject to change. Appraisal reimbursement available for loans closed with JPAL Mortgage LLC and applied at closing. NMLS ID #2189752 | Equal Housing Opportunity.

Cash-Out Refinance FAQs:

Can I use a cash-out refinance to remodel my home?

Yes. Many homeowners use a cash-out refinance to fund renovations such as kitchens, bathrooms, basements, roofing, or energy upgrades.

How much cash can I take out for renovations?

Most conventional loans allow borrowing up to 80% of your home’s value, minus your existing mortgage balance.

Is a cash-out refinance better than a HELOC for renovations?

It depends. A cash-out refinance replaces your entire mortgage, while a HELOC adds a second loan. The best option depends on your rate, equity, and long-term goals.

Do renovations increase home value?

Many renovations can increase property value, especially kitchens, bathrooms, finished basements, and energy-efficient upgrades.