Cash Out Refinance
What is a Cash-Out Refinance?
A mortgage refinance happens when the homeowner gets a new loan to replace the current mortgage, often to get a lower interest rate. A cash-out refinance happens when the borrower refinances for more than the amount owed. The borrower takes the difference in cash. Also called a cash-out refi.
Why choose a Cash-Out Refinance?
A standard mortgage refinance occurs when the homeowner wants to replace their current loan with a new loan, generally, in hopes to lower their interest rate. A cash out refinance allows you to not only lower your interest, but also refinance for a higher value pocketing the difference in cash. There are some things to consider when choosing a cash out refinance over a home equity line of credit though. When you refinance, you have to pay closing costs which could be hundreds to thousands of dollars whereas a HELOC you do not. If you are taking out a loan that is of higher value then you want to make sure you will not be paying a higher interest rate. Always consider how far into your loan term you are when deciding if a cash-out refinance is the loan product for you.