A mortgage refinance in which the borrower increases their loan amount by accessing the equity in their property to garner additional cash for either debt consolidation or home improvements.
A cash out refinance is mortgage refinance in which the borrower increases their loan amount by accessing the equity in their property to garner additional cash for either debt consolidation or home improvements. For example, a borrower who owes $300,000 on their mortgage refinances into a new $400,000 loan in order to access $100k of the equity in their home. That $100k can then be used to consolidate existing debts or tackle some major home repairs.
Interest rates are oftentimes higher for cash out loans, depending on the amount of equity remaining in the home. Additionally, guidelines for qualification tend to be slightly more stringent for cash out refinances. An alternative way to access cash from home equity would be from a Home Equity Line of Credit.