Search Glossary:
  • Glossary Terms
  • Categories All Categories
    • All Categories
    • Home Loan
    • Credit
    • Refinance
    • Mortgage
    • Home Equity
    • FHA Loan
    • Auto Loans
    • Credit Repair
    • Personal Loan
    • Debt Consolidation
    • Reverse Mortgage
    • Auto Refinance
    • Credit Scores
    • Student Loan
    • Business Loan
    • Student Loan Refinance
    • RV Loans
    • Motorcycle Loans
    • Boat Loans
    • Powersport Loans
    • Pre Approval
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Cash-Out Refinancing
Search by alphabetic

Cash-Out Refinancing

A refinance in which the new loan amount exceeds the total needed to pay off the existing mortgage. The difference goes to the borrower and can be used for any purpose.

More On Cash-Out Refinancing

Cash-out refinacing is a refinance in which the money the new loan amount exceeds the total needed to pay off the existing mortgage. The difference goes to the borrower and can be used for any purpose.

Cash-out refinancing is one method of converting home equity to cash. The other ways include selling the house, adding a home equity loan or home equity line of credit or taking out a reverse mortgage. When deciding on one of these options, homeowners should ask themselves a couple of questions:

  • Does refinancing make sense without taking cash out? In other words, would the new loan generate enough savings to cover the cost of refinancing? If not, a home equity loan may be a better choice.
  • Which method is less expensive – a rate-and-term refinance plus a home equity loan? Or a cash-out refinance? Cash-out refinances often come with higher fees than rate-and-term refinances.

Finally, there’s the limited cash-out refinance. The borrower does not usually receive cash from the transaction, but the costs of refinancing are wrapped into this loan. Occasionally, the borrower may receive a small sum when closing if the closing costs end up being less than expected.
 

Resources: 
How does cash-out refinancing work?
Pros & Cons
Cash-out FHA
Get cash-out refinance offers