Equity in a home may be accessed for cash at closing through a cash-out refinance. Any existing home mortgage and liens on the property are paid and replaced with a refinanced mortgage. In the cash-out refinance transaction, the new loan amount exceeds the total of the principal balance of the existing first mortgage and any secondary mortgages or liens, together with closing costs and points for the new loan.
Cash-out refinancing is different than a home equity loan:
- A home equity loan is an additional loan on top of your first mortgage
- A cash-out refinance is a replacement of your original mortgage
- Interest rates on a cash-out refinancing are often lower than those on a home equity loan
- You pay closing costs when you refinance your mortgage
- You typically don't pay closing costs for a home equity loan
In most cases, with a refinance, borrowers should be planning to be in the home for awhile. When making the decision to refinance, borrowers should consider the number of months, of lower payments, required to recoup the closing costs of the new mortgage. Cash-out refinance loans can be used for home improvement projects, home repairs, as well as unplanned or emergency expenses.
First Liberty assists many different types of borrowers with a variety of refinancing options. Our clients represent a wide range of individuals with specific goals, needs, and resources. If you'd like to discuss your refinancing needs with one of our knowledgeable mortgage lending experts, contact us today.