Question:

When are cash-out refinance home loans useful to consider?

Answer:

Cash-out refinance home loans are useful when you want to refinance the remaining $100,000 on a $200,000 house to a better rate and even get some additional $30,000 to spend as you please. Say, on your kid's first year in college.

The cash-out refinance home loan will replace your existing mortgage, unlike a home equity loan that will come on top of it and is also called a second mortgage. You will get to pay closing costs for a cash-out refinance, but your interest rates will most often be below home equity loan interest rates.

When is it better not to cash out?

If your existing mortgage's rate is low enough and you cannot refinance to a lower rate, you don't want to replace it with a higher rate for a higher amount. So, what you can do is consider a home equity loan instead. Especially if you are far into the loan, like 10 years into 15-year mortgage and you are paying more principal than interest.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
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