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A cash-out refinance is a type of mortgage that you can get in order to gain access to your home's equity. Here are the basics of the cash-out refinance.
Cash-Out Refinance
The cash-out refinance is a type of mortgage that many people use when they need to generate a large amount of cash. With this product, you are going to essentially be setting up a new loan for an extended period. For example, let's say that you originally had a 30-year fixed-rate mortgage for $200,000. You have paid on the mortgage for several years, and your mortgage balance is now $100,000. At this point, you could take out a new mortgage on the property for $200,000, but you will owe only $100,000 on your old mortgage. This means that you could pay off your existing mortgage and keep $100,000.
Considerations
When you do this, you need to think about the consequences involved. You are going to be extending your loan for many more years. In the above example, you would have to start paying for a new 30-year term on top of what you have already paid. This means that the lender will extend the time that it takes to pay off your mortgage.
