Pull Cash Out

Pull cash out summary:

• To pull cash out means to turn equity or capital into cash you can spend.

• You could pull cash out of your bank account by doing an ATM transaction.

• You could pull cash out of your home by getting a home equity loan using your home's value as collateral or security.

Pull cash out definition and meaning

Pull cash out means to access capital that’s tied up in something and converting it into liquid cash, or cash you can spend. You can pull cash out in different ways. You could pull cash out of your bank account, savings account, or other investments. You could also pull cash out of the ATM, or pull cash out of your home by accessing your home equity through a home equity line or home equity line of credit. 

Key concept: Converting part of an asset, like a home or investment, into liquid cash you can spend.

More on pull cash out

Pulling cash out involves accessing money that you have in some asset or account. The purpose is to make the money accessible to you. Often, you will pull cash out for something specific, such as an important purchase.

Types of pulling cash out

You can pull cash out in different ways, such as these common situations:

• Pull cash out of your home.  If you have equity in your home, the market value of your home is higher than any loans on the home. You can pull cash out of your home by using its value as collateral, or security, for a home equity loan, a home equity line of credit, or a cash-out refinance loan.

• Pull cash out of an investment. If you have money invested in index funds or stocks, you could sell shares to pull cash out. You may do this if you no longer think the investment is sound, or if you need the money for something else. You could also change your investing strategy and pull cash out in order to invest in something that seems more suitable for your goals. 

• Pull cash out of a bank account. If you have money in a savings or other bank account, you could go to an ATM and take the money out of the account. 

Pull cash out: a comprehensive breakdown

Here’s a step-by-step guide to how you could pull cash out, using home equity as an example.

1. Check your equity. Start by calculating your home equity, which is the difference between the current market value of your home and your mortgage balance. 

2. Decide on a loan type. You could choose a home equity loan if you want a lump sum that you’ll repay in fixed payments. Or you could go with a home equity line of credit (HELOC), a revolving line of credit similar to a credit card, which has a specified draw period and a repayment period.

3. Apply. Submit your application to the lender. They review your income, credit score, and existing debts.

4. Approval and access. If approved, the lender gives you cash (lump sum or line of credit).

5. Repay. You repay the principal and interest according to the loan terms.

Real-life examples of pull cash out

Consider these potential examples of how you could pull cash out.

Sabrina has been investing in the stock market for several years and her portfolio has grown to $45,000. She needs $8,000 to buy a used car. To cover the cost, she sells a portion of her stocks and moves that money into her checking account. By selling those shares, Sabrina is pulling cash out of the market.

Sam wants to go back to school to further his career. His home has built up $120,000 in equity, so he takes out a $30,000 home equity loan. The bank gives him the funds in a lump sum, which he uses to cover tuition and books. By borrowing against his home’s value, he’s pulled cash from the equity in his home to help pay for his education.