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A cash out refinance mortgage loan is a great option if you have accrued a lot of equity in your home. If you owe $75
0
on a home that is worth $125
0
you could refinance the amount you owe and take up to $50
0
in a cash loan against the equity in your house. The money can be used to consolidate debts
do a remodeling project
or even invest. As great as a cash out refinance can be
there are a few things to think about before you decide to take out this type of loan.

How high are the fees to refinance?

Taking out a home equity loan usually costs less in fees than a refinance. Refinancing your home can cost you quite a bit when you consider higher loan fees and the possibility of points. If you already have a good interest rate on your loan
refinancing so that you can get a cash out option
might mean paying a higher interest rate on a new loan. In that situation
you might want to consider taking out a home equity loan instead of a cash out refinance mortgage loan.

How fast do you need the money?

When you take out a home equity loan
it takes less time to see your money. Often
it only takes 5 days to close. Cash out refinance mortgage loans can take a lot longer
so if you need the money immediately
it probably isn’t the best option.

Protect yourself from scam artists.

There are lenders that practice something called loan flipping. They convince you to refinance your house
taking out a bit of equity for a project or two. A few months later they approach you to refinance again
convincing you to take out more cash from the equity in your house. Their scheme is to keep having you refinance
tacking on large fees and possibly increasing your interest rate until you are so far in debt that you end up losing your house. This particular scam has been played against many elderly homeowners with devastating results.

Taking cash against the equity in your house can be a wise move
but always compare taking a cash out refinance mortgage loan against the option of taking out a home equity loan and choose the plan that is best for you.