REFINANCE OPTIONS

CASH-OUT

In short, a cash-out refinance is a loan to refinance your mortgage and get a lump-sum of cash by using the equity in your home as security.

Home equity is the difference between the value of your property and the amount you owe on it. So if your property is worth $400,000 and you owe $250,000 on your mortgage, you would have $150,000 in equity.

When you have equity, you can refinance your mortgage and take out a loan that is greater

than the amount you owe on your existing mortgage.

For instance, using the above example, let’s say you took out a loan for $300,000. You would pay off your old loan and have $50,000 left to cash out.

RATE & TERM

A rate-and-term refinance changes the interest rate, the term—or both the rate and the term—of an existing mortgage without advancing any new money. It is also known as a “no cash-out refinance.”

• A rate-and-term refinance alters an existing mortgage's interest rate or without advancing new money.

• Rate-and-term refinancing activity often occurs in response to a decline in prevailing interest rates, while cash-out refinances are often driven by increasing home values.

• If your credit has improved substantially, you may be able to refinance at a lower interest rate.