Cash-Out Refinancing

Cash-out mortgage refinancing is a way for you to use the equity you have built up in your home to provide the cash you need for other things. Basically this is the process of refinancing your home for more than you currently owe on it and getting the difference back in cash.

Refinancing your mortgage now can be beneficial to you in more ways than just providing you with cash. Refinancing may provide you with the opportunity to get a lower interest rate than your original loan had.

An example of how cash-out refinancing works is if your original mortgage was $100,000 and you have re-paid $50,000 back, but now you want $20,000 to pay down some other debt or make a purchase you can refinance your mortgage for $70,000 and the bank will give you a check for $20,000. The money you get from the bank can be used for anything you need it for.

Cash-out refinancing can sometimes be confused with a home equity loan, but they are not the same thing at all. A home equity loan is a second mortgage on top of your existing mortgage. Cash-out refinancing is a replacement of your original mortgage. Cash-out refinancing besides just providing cash if you need it can also help you get a lower interest rate or a longer repayment term if you need to lower your monthly payments. If for some reason the interest rate is higher for a refinanced mortgage, then you would probably be better off with a home equity loan or line of credit. You should discuss both options with your lender to make sure you get the one that will be most beneficial to you and your needs.


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