What is a Cashout Refinance
Cashout refinance is a kind of mortgage refinance where the borrower takes cashout more than the existing loan amount. If you have an existing mortgage and you want to some cash then you can chose for this kind of refinance. So the new loan will have the existing loan balance plus the extra cash you want.
Suppose your property value is $600K and your home equity is $250k. Now you need $450k for some reasons, then your can go for the cashout refinance. Previously the loan balance was $350k but after the cashout refinance, your loan balance will be $450k. Thus you are getting cash out of your home equity through cash out refinance.
If you have a second mortgage or any other debts of higher interest rate, then you can go for a refinance and pay off the debts and will the refinance you can get lower rates and better terms too. You can also pay your child’s tuition fees, improve your home, purchase a new property or pay the medical bills.
Now you need to keep in mind that you cannot go for a cashout refinance within a year after you got the mortgage and you should have enough home equity before going for the cashout refinance.
So if you have good amount of home equity and you need some easy cash then you can consider cashout refinance. Your should go for a detailed market research to find the best lender who can provide you the best rates and terms.