What is a cash-out refinance?
In simple terms, a cash-out refinance replaces your current mortgage with another loan that:
- Pays off your current mortgage balance.
- Uses the equity in your home to provide additional funds for other purposes.
- Your interest rate and monthly principal and interest (P&I) payments remain the same for the life of your loan.
- Available in a variety of loan term options.
- You may be able to add extra features such as a temporary payment reduction.
- Predictable monthly P&I payments allow you to budget more easily.
- Protection from rising interest rates for the life of the loan, no matter how high interest rates go.
- May be a good choice if you plan to stay in your home for a long time.
- The overall interest you pay is higher on a longer-term loan than on a shorter-term loan.
- On a shorter-term loan, the monthly P&I payment is typically higher than on a longer-term loan.
To help you determine whether a cash-out refinance may help you with your long-term home financing goals, contact your home mortgage consultant.