Cash Out Refinance FREE MORTGAGE RATE QUOTE:      Loan: Home Refinance Home Purchase Home Equity Debt Consolidation   State: -Select One- AlabamaAlaskaArizonaArkansasCaliforniaColoradoConnecticutDelawareD.C.FloridaGeorgiaHawaiiIdahoIllinoisIndianaIowaKansasKentuckyLouisianaMaineMarylandMassachusettsMichiganMinnesotaMississippiMissouriMontanaNebraskaNevadaNew HampshireNew JerseyNew MexicoNew YorkNorth CarolinaNorth DakotaOhioOklahomaOregonPennsylvaniaRhode IslandSouth CarolinaSouth DakotaTennesseeTexasUtahVermontVirginiaWashingtonWest VirginiaWisconsinWyoming   Property: Single FamilyMulti-FamilyCondominiumTownhouseMobile HomeManufactured Home   Credit: Excellent good Fair Poor                       Cash-out refinance is often considered an option for borrowers when they are looking forward to receive cash, out from the increased value of their home to use for debt consolidation. In other words, with cash-out refinancing, the borrower refinances the mortgage for more than what he owes and then takes the difference as a loan. Cash-out refinance mortgage offers flexibility and variety so that the borrowers diverse range of needs can be meet easily. However, cash-out refinance should not be confused with home equity loan. Cash-out refinance differs from home equity loan in several ways. -Cash-out refinance is a replacement of the first mortgage but a home equity loan is a separate loan on top of your first mortgage. -In cash-out refinance the interest rates are usually lower than the interest rates on home equity loan. -Also, for cash-out refinance the borrower pays a closing cost when they refinance their mortgage. On home equity loan, the borrower is not needed to pay any closing costs.   As a borrower, cash-out refinance can be useful to you in the following ways:  - The borrower can receive cash out to consolidate debt or for any other purpose. - The borrower can pay off junior liens, including HELOCs. - The borrower can pay off purchase money for junior lien or a leasehold interest, pay   for home improvements or buy out the equity of an ex-spouse, joint heir or joint devisee. - The borrower can also eliminate upfront costs by rolling all closing costs, financing costs and prepaid items into the new loan amount. However, cash-out refinance can be a benefit to you depending on how much you choose to save each month and what you want to spend your money on. It's best to take a close look before you opt for cash-out refinance and plan how you are going to spend it. Decide whether you are considering the cash-out for a short-term purpose or a long-term purpose. Cash-out refinance is however considered as a riskier option when put against other refinance options for lenders. This is because the borrowers who opt for a cash-out refinance subsequently have a poorer payment records and in some cases they may be financially distressed. As a borrower if you have decided to opt for cash-out refinance, keep in mind that you may have to pay private mortgage insurance if you end up borrowing more than 80 percent of your home's value. Wisely consider the reasons you want to opt for a cash-out refinance, if you are going to make payments for 15 or 30 years, it makes sense to spend the money on something enduring. If you want to spend the money on a vacation, or a car or a boat, think again. Do not spend the next 15 years paying for a 15 days vacation. Cash-out refinance may seem like the best option to you as a borrower since you have to pay at a low interest rate and you can take a tax-deduction but you're also lengthening the time to pay-off, hence paying more.