Cash-Out Refinance
Definition
A cash-out refinance replaces your existing mortgage with a larger one and pays you the difference in cash. You are left with a single new mortgage rather than a second loan beside the first.
If $250,000 is owed on a home and the new mortgage is $300,000, roughly $50,000 comes back as cash, less closing costs.
The whole balance is refinanced at the new rate, which cuts both ways. It can help when rates have fallen since the original mortgage and cost real money when they have risen.
Closing costs apply as on any mortgage, and the loan is secured on the home.