The truth about cashback refinances.
A $3,000 cashback looks great on the billboard. It's also the reason some clients end up on a rate that costs them four times that in extra interest over the next five years.
When cashback is real value, and when it's bait.
Lenders offer cashback to attract new business. The offer is usually a one-off payment of $2,000–$4,000 on refinance, sometimes more. The question is always: what rate are you being shifted to, and is that rate competitive for the next 5+ years?
On a $600,000 loan balance, a 0.15% higher rate costs about $900 a year in extra interest. Over five years that's roughly $4,500 in additional cost — potentially more than the cashback paid you upfront. On a $400,000 loan, the same differential costs $600 a year, which is where a $3,000 cashback actually comes out ahead. Balance matters. Remaining term matters. And what the lender does to your rate six months after settlement matters most of all.
Cashback FAQs
How long is the cashback locked in?
Is the rate actually competitive?
Can I stack cashback offers by refinancing repeatedly?
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