If your home value has increased, one option is to use a cash-out refinance. Anything that talks about "cashing out" sure sounds good, right?
What Is a Cash-Out Refinance? A cash-out refinance is a refinancing of an existing mortgage loan, where the new mortgage loan is for a larger amount than the existing mortgage loan, and you (the borrower) get the difference between the two loans in cash.
The three most popular cash-out refinance options are: Conventional Cash-Out – Cash-out refinancing options are available to qualified homeowners with more than 20% equity in their homes. FHA Cash-Out – This cash-out refinancing option is available to homeowners with more than 15% equity in their homes.
A cash-out refinance can come in handy for home improvements, paying off debt or other needs. A cash-out refi often has a low rate, but make sure the rate is lower than your current mortgage rate.