With interest rates at historic lows, many homeowners are considering mortgage refinancing. A typical refinancing entails closing out your original loan and opening another — same principal balance financed at new terms and a better rate.
A cash-out refi is different. It allows a homeowner to borrow some money and refinance a mortgage simultaneously. In a nutshell, it’s like refinancing your mortgage, adding a home equity loan or line of credit (HELOC), and receiving a fat check at closing.