What's a cash-out refinance?
As you pay off your mortgage, you gain equity in your home. Basically, equity is how much of your home's value that you've paid off. Sometimes though, you'll have a need for cash. In that case, you can take some of the equity you've built up in your home in exchange for a mortgage that's higher than what you owe. By getting a larger mortgage, you're able to take the difference in cash. This is called a cash-out refinance.
The cash can be used for any purpose, so it could be a good option if you're looking to fund a large expense like home improvements, paying for college, or paying down debt.
Cash-out refinances sometimes will have slightly higher interest rates than regular refinances, and they come with closing costs and fees (which may be rolled into the loan so you don't have to pay them out-of-pocket). Even with these considerations, a cash-out refinance can be a great option, and we're here to help you see if it might be right for you.