Cash-out refinancing (re-fi) allows borrowers to refinance their mortgage for an amount greater than what is currently owed, so that the borrower receives the difference in cash. The amount of cash a borrower receives is equal to the difference between the new mortgage amount and the amount owed on the original mortgage (plus loan-origination costs).
This money can be used for any purpose, including education, remodeling, or paying off debt. Cash-out refinancing is an alternative to home-equity loans for homeowners who want to raise cash through their home’s equity.
