Cash-Out Refinance

  

Categories: Banking, Metrics, Accounting

You need money to buy that Honda CR-V that you’ve been talking about, for some reason.

If you're looking to make a mistake with your finance, consider a "cash-out refinance."

In the biz, they call it a cash-out refi. But they don't tell you that you're just pushing yourself further into debt. To qualify, you'd need to have put down an existing down payment, or paid off at least 20% of the equity. From there, you engage in the cash-out refinance that pays off your mortgage.

You then take on a new loan that is worth more than what you owe to the bank, and pocket the difference in cash. You’ll have a completely different set of loan terms, including a new payment and schedule. You’ll be able to use that cash to pay bills and maybe buy that awesome Honda you won’t shut up about.

But you’re going to have a lot more debt than you used to, and that’s never a good thing.

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