Definition
Replacing your mortgage with a new one for a higher amount, so you get the difference in cash. Often used for home improvements or debt consolidation.
What to consider
- Build a reserve to cover those unexpected moments in life.
- Keep it separate from your regular checking so it’s not accidentally spent.
- Review your reserve periodically to see if it still meets your needs.
Real world scenarios
- Cynthia refinances her home to tap into equity and fund a kitchen remodel, combining a lower rate with extra cash.
- Martin uses the cash-out refinance proceeds to pay off high-interest credit card debt, simplifying his monthly obligations.
- Before finalizing, Ali compares closing costs to ensure the refinance won’t cost more than it’s worth.
Related terms
Related Playbooks
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