Cash-out Refinancing

What is a cash-out refinance?

When a cash-out refinance is taken out, the loan amount is larger than the current loan payoff amount, plus the costs of the transaction. You do this by liquidating your home equity. Most programs have a maximum amount which can be taken out. This can be very useful if you need to pay for a large expense and wish to do so at a lower interest rate than other loan types available to you. It’s important to note that mortgage closing costs still apply, so you should factor this into your decision.

What are the benefits of cash-out refinances?

If you have a large expense to pay for, for example home improvement projects, you can do so without tapping into cash reserves or taking on higher-interest debt from credit cards or similar instruments. It can also be used for debt-consolidation, which is also beneficial due to the likelihood of lower interest rates.

Am I eligible for a cash-out refinance?

You must have sufficient income, and a strong credit history in order to qualify, similar to applying for other types of home loans.