What are the pros and cons of refinancing with cash-out?
Refinancing with cash-out is the transaction which allows you to refinance an existing home loan and even get extra cash when closing. For example, if you have a mortgage on a house worth $150,000 and the remaining mortgage balance is $90,000, and you need some cash now, you can refinance this current loan into a new $140,000 and get $50,000 cash. Sometimes the cash-out loan may equal 125% of the house worth while some lenders will not allow cash-out to be more than 80% of the property value. Either way, with a cash-out you will be left with a bag of money to spend. Other pros of refinancing with cash-out are the less stringent requirements, since you already are the owner of the house. Also, you may be entitled to tax benefits if you are using refinancing with cash-out to pay debt with non-deductible interest. Lastly, but not last, with a refinancing with cash-out you usually get lower rates than with a home equity loan.
