Definition of Cash-out refinance:
In the real estate world, refinancing in general is a popular process for replacing an existing mortgage with a new one that typically extends more-favorable terms to the borrower. By refinancing a mortgage, you may be able to decrease your monthly mortgage payments, negotiate a lower interest rate, renegotiate the number of years, modify periodic terms, remove or add borrowers from the loan obligation, and potentially access cash.
Refinancing a mortgage for more money than it originally covered, to use the extra money for personal purposes. The amount of cash a borrower can take depends on several factors, including the value of the home, amount of the mortgage, income, and credit. The borrower receives this money in a check after closing.
A cash-out refinance is a mortgage refinancing option in which an old mortgage is replaced for a new one with a larger amount than owed on the previously existing loan, helping borrowers use their home mortgage to get some cash.
How to use Cash-out refinance in a sentence?
- In a cash-out refinance, a new mortgage is for more than your previous mortgage balance, and the difference is paid to you in cash.
- A lender will determine how much cash you can receive with a cash-out refinancing, based on bank standards, your property’s loan-to-value ratio, and your credit profile.
- You usually pay a higher interest rate or more points on a cash-out refinance mortgage, compared to a rate-and-term refinance, in which a mortgage amount stays the same.
Meaning of Cash-out refinance & Cash-out refinance Definition