Can You Refinance a Home Equity Loan?
Posted by @TopMortgageRate
What is a cash-out refinance?
With cash-out refinancing, you refinance your mortgage for more than you currently owe. You take the difference in cash. It's called a cash-out refi for short.
How a cash-out refi works
As a hypothetical example, let's say you bought your house a few years ago and have been making mortgage payments faithfully. And while you’ve been paying, the home's value has been going up. Now you owe $80,000 on a house that's worth $250,000.
You have recently looked up mortgage rates and have discovered that you can snag a lower rate if you refinance. You also would like to free up cash to pay for home remodeling.
In this situation, you could refinance for more than the $80,000 you currently owe. If you wanted to take out $50,000 cash, you could refinance for $130,000: the $80,000 loan balance plus the $50,000 cash you would receive.
You would have to prove you could afford the monthly payments and otherwise qualify for the loan. And you would have to provide the usual documentation of income, assets and debts.
Start out by comparing offers from lenders.
Read more on bankrate.com