Cash Out Mortgage Refinancing

Cash-Out Mortgage Refinancing
Your house is​ a​ potentially large source of​ ready money if​ you​ are willing to​ sacrifice some of​ your equity in​ return for liquidity .​
Cash-out mortgage refinancing is​ one way to​ access this cash .​
What is​ cash-out mortgage refinancing?
Cash-out refinancing involves refinancing your mortgage for more than you​ currently owe and pocketing the​ difference .​
If you​ have been paying down your mortgage for some time,​ then the​ principal on​ your mortgage is​ likely to​ be substantially lower than what it​ was when you​ first took out your mortgage .​
That build-up of​ equity will allow you​ to​ take out a​ loan that covers what you​ currently owe -- and then some .​
For example,​ say you​ owe $90,​000 on​ a​ $180,​000 house and want $30,​000 to​ add a​ family room .​
You could refinance your mortgage for $120,​000,​ and the​ bank will then hand over a​ check for the​ difference of​ $30,​000 .​
You can take the​ difference and use it​ for home renovations,​ second-property purchases,​ tuition,​ debt repayment or​ anything else that needs a​ significant amount of​ cash .​
What’s more,​ you​ may be able to​ get a​ more favorable interest rate for your refinanced mortgage.
However,​ if​ the​ interest rate offered for your refinanced mortgage is​ higher than your current rate,​ this probably isn’t a​ sensible choice .​
a​ home equity loan or​ line of​ credit (HELOC) might be a​ better idea .​
Typically,​ homeowners are allowed to​ refinance up to​ 100 percent of​ their property’s value .​
However,​ if​ you​ borrow more than 80 percent of​ your home’s value,​ you​ may have to​ pay private mortgage insurance,​ or​ pay a​ higher interest rate .​
To learn more about cash-out refinancing,​ visit

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