| One of the products that some homeowners find | | | | home, but just cash out the equity. If you are happy |
| confusing is the Cash Out Refinancing Loan. Many | | | | with the interest rates or current terms of your |
| people use Cash Out and Home Equity Loan | | | | mortgage and would just like to have access to your |
| interchangeably; however they are different loan | | | | equity, a home equity loan is the right choice. |
| products with some similarities. Here is some | | | | Pros & Cons |
| information on both of these types of loans. | | | | For homeowners that need quick access to their |
| Cash Out Refinancing | | | | equity, a home equity loan is the much quicker way to |
| A cash out refinancing loan is part of the umbrella of | | | | access it. While a cash out a refinancing loan can take |
| refinancing loan products. A refinancing loan is a new | | | | several weeks or more than a month to close, some |
| loan to pay off an older loan, using the same property | | | | home equity loans can close in as little as one week. |
| as collateral. With a cash out refinancing loan, you can | | | | Another advantage of the home equity loan is that |
| "cash out" the equity of your home that has | | | | there are usually lower fees involved. You are usually |
| appreciated over the years. For instance, if your home | | | | not required to pay points, but only normal closing and |
| is appraised at $200K and you only owe $100K on the | | | | administration fees. |
| original mortgage, you have $100K of equity built up. A | | | | If you are interested in repaying your loan over the |
| cash out refinancing loan allows you to refinance the | | | | long haul to reduce your monthly payment cash out |
| loan and also let you access some of the equity built | | | | refinancing loans is your best option. Most loans in this |
| up. In the above case, you can refinance your home | | | | category have 15 year or 30 year terms and a low |
| for a total of $150K, cashing out $50K of equity. | | | | rate. |
| Home Equity Loan | | | | If you are looking for the lowest rate for a loan, the |
| A home equity loan is different from a refinancing loan; | | | | cash out refinancing loan is typically more competitive |
| it is a second mortgage that is secured using your | | | | than a home equity loan. However, most refinancing |
| home as collateral. The original mortgage is still in place. | | | | loans include points that can make these rates less |
| With a home equity loan, you do not refinance your | | | | attractive. |