How does REFI after Reno work?

[James Galla]

Hi,

So I have a question based on this hypothetical to see the mechanics of a refinance, specifically a cash -out refi. 

So, imagine I purchase a home for $25k and then do renovations to where the value is increased by $25k to $50k. If I were to do a cash out REFI, would the remaining loan be paid off and some of the newly created equity would be loaned on so that I would receive cash back? For example, would the REFI dip into my equity by $5000 (or whatever) so my new loan would be $30k with the property as collateral? After dipping into the newly created equity, I would receive the $5k as cash back?

Does anyone have any useful guides on how the mechanics of a REFI (cash-out and rate and term) work?