Cash-Out Refinance vs.
Home Equity Loans

Let's say you have a home that's worth $150,000 and you owe $100,000 on the mortgage. That means you have $50,000 of equity in your home, which is like having $50,000 in a savings account. A cash-out refinance allows you to access that equity. For instance, if you need $10,000, you can refinance your mortgage so that you owe $110,000 and the lender then gives you $10,000 in cash at closing.

Since every homeowner's situation is different, your best option will depend on your specific circumstances. Rock Financial has several mortgage options to choose from. When you compare cash-out refinance loans further, there are a few things you should consider in order to determine what's best for you:

Speed

Need cash fast? Cash-out refinances can be done as quickly as two weeks.

Rate

A cash-out refinance loan typically has a lower rate than a home equity loan and can be done without taking out a second mortgage.

Term

Cash-out refinances lump all your payments into one low payment instead of having multiple payments due each month.

A Rock Financial mortgage expert can help you learn more about a cash-out refinance loan. With your own personal mortgage expert to guide you, you'll have no trouble determining if this loan is right for you.

If you still have questions, please call us at 800-762-5210 to talk to a refinance expert today. We can help you determine which refinancing option is best for your situation.

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Terms Used in this Refinance Article

Cash-Out Refinance

Cash received when you refinance your existing loan with a loan that is larger than the balance of your current mortgage, based upon the equity you have already built up in the house. The cash-out amount is calculated by subtracting the sum of the old loan and fees from the new mortgage loan.

For example, if your existing loan is $100,000, you might refinance it with a loan of $120,000. After you pay off your current loan ($100,000) and any loan-origination costs for the new loan (for example $2,000 in points), you would be left with $18,000 cash.

Cash-out loans may not be available for all types of property.

Points (or Discount Points)

Points are an up-front fee paid to the lender at the time that you get your loan. Each point equals one percent of your total loan amount. Points and interest rates are inherently connected: in general, the more points you pay, the lower the interest rate you get.

Second Mortgage

An additional mortgage placed on a property that has rights that are subordinate to the first mortgage. A second mortgage is a lien in which you are given a lump sum amount that you pay off in installments over a specified period of time. Home improvement and debt consolidation loans are considered second mortgages.