What is Cash-Out Refinance?
A cash-out refinance replaces your mortgage with a larger loan and gives you the difference in cash, drawing on your home equity. It is used to fund things like remodels, debt payoff, or other large expenses. Because you are borrowing more, the new payment is typically higher.
Example: A homeowner with $300,000 in equity refinances into a loan $80,000 larger than the old balance and takes that $80,000 in cash to remodel the kitchen.