Cash-Out RefinanceA cash-out refinance takes advantage of the equity you’ve built in your home and gives you money back by refinancing into a larger mortgage. In other words, you are able to borrow more than you owe on your current mortgage and pocket the difference.
What you need to know about cash-out refinancesA cash-out refinance can help you feel financially empowered by allowing you to use the equity from your home to get cash back. You can use the money received to do whatever you'd like, including paying medical bills, consolidating or paying off debt, or even going on your dream vacation.
Cash-out refinances are ideal when the overall value of your home has increased. However, cash-out refinancing can also be done if you have paid a good amount of your current mortgage down and have built a significant amount of equity. A cash-out refinancing increases the principal owed on your mortgage.
If you do not need cash back and want to refinance to reduce your monthly mortgage rates, a rate-and-term refinance may be the answer.
Use the equity in your home to get cash back.
May give you a lower rate if you obtained your loan when rates were higher.
Take cash out to pay off things like high-interest credit card debts to save in interest.