A cash-out refinance in real estate refers to the process of refinancing a mortgage for a higher amount than what is currently owed, and then receiving the difference in cash.
This strategy is often used by homeowners who want to tap into their property’s equity for other financial needs.
Related Real Estate Terminology
- Equity: The monetary value of a property after subtracting the remaining mortgage balance.
- Home Equity Loan: A type of loan that allows homeowners to borrow money using the equity in their home as collateral.
- Home Equity Line of Credit (HELOC): A line of credit extended to a homeowner that uses the borrower’s home as collateral.
- Refinance: The process of obtaining a new mortgage in an effort to reduce monthly payments, lower interest rates, take cash out of your home for large purchases, or change mortgage companies.
- Loan-to-Value Ratio (LTV): The percentage of the appraised value of a property that a lender is willing to lend.
References
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