Cash Out Refinance.

Refinancing can potentially lower your monthly payment, pay off your mortgage faster or get cash out for a big project you’ve been planning. Cash-out refinance gives you a lump sum when you close your refinance loan, and the proceeds are first used to pay off your existing mortgage(s), including closing costs and any prepaid items (for example real estate taxes or homeowners insurance); any remaining funds are yours to use as you wish.

Cash Out Refinance Pros

• Take advantage of lower rates or switch from an ARM to a fixed-rate loan
• Cover an ARM balloon payment with a lump sum
• All your mortgage finances in one loan
• Maximizes your monthly savings

Cash Out Refinance Cons

• Monthly payments increase, because you are borrowing more
• New mortgage replaces your old loan with new terms and amortization schedule