Cash-Out Refinance: What You Need to Know

A cash-out refinance allows you to refinance your mortgage for more than you owe, with the difference paid to you in cash. This option can help fund home improvements, consolidate debt, or cover big expenses, but it's important to understand how it works before deciding if it’s right for you.

Why Consider a Cash-Out Refinance?

• Access to Cash: Use the funds for debt consolidation, home renovations, or large expenses.
• Lower Interest Rates: Mortgage rates are typically lower than credit cards or personal loans.
• Consolidate Debt: Combine high-interest debts into one lower-rate mortgage.

Pros

• Access significant funds at lower interest rates than unsecured loans.
• Save on interest if refinancing to a lower mortgage rate.

Cons

• Increased Debt: You’re taking on a larger loan balance.
• Closing Costs: You’ll pay fees similar to a regular refinance.

When Should You Consider It?

A cash-out refinance makes sense if you have enough equity, plan on staying in your home long-term, and can handle the higher mortgage payments. However, if you’re unsure, other options like home equity loans or lines of credit may be better.

For more information and to explore if a cash-out refinance fits your needs, contact a Horizon Bank location today.