A cash-out refinance can give you money in your pocket to help make home improvements, consolidate existing debt, buy a new car, pay college tuition or finance other goals. With this kind of refinancing, you will pay off your current mortgage loan and take out a new mortgage at a higher amount. You will need to have adequate equity in your home to make this possible.
Example: The Smiths’ home is appraised at $175,000 and they have $108,000 and 25 years remaining on a 30-year fixed-rate mortgage. They want to get $25,000 cash out of their refinance to pay off their credit card debt and put a downpayment on a new car.
|Mortgage amount||Rate||Term||Monthly P&I Payment Cash out||Cash out|
|Current mortgage||$108,000||5.25%||25 years remaining on 30-year fixed||$673||N/A|
|Refinance/new mortgage||$132,000||4.75%||30-year fixed||$689||$25,000|
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