 TITLE: Should I Do a Cash-Out Refinance to Pay Off Debt? CONTENT: Risks of Using a Cash-Out Refinance for Debt\n--------------------------------------------\nOne of the primary reasons to consider using a cash-out refinance to consolidate high-interest debt is that you can typically get a much lower interest rate on a mortgage loan than you can with credit cards, personal loans and other expensive credit options.\nHowever, there are some potential pitfalls that can have a significant impact on your financial well-being:\n*   **Threat to your home**: When using a cash-out refinance to consolidate other debts, you're essentially converting unsecured debt to secured debt. Your monthly mortgage payment will go up, and if you can't make your payments, you could risk default and foreclosure. In contrast, defaulting on a credit card or personal loan may harm your credit, but it won't cause you to lose your home.\n*   **Closing costs**: The fees involved in refinancing a mortgage loan can amount to 2% to 6% of the loan amount. You can typically choose to pay those costs upfront or roll them into the new loan. If you pay upfront, the savings you gain from consolidating high-interest debt will need to be more than the closing costs. If you roll them into the loan, it could reduce how much you qualify for. What's more, you'd end up paying interest on the closing costs for as long as you have the loan.\n*   **Impact on your credit score**: Mortgage lenders run a hard credit inquiry on your credit reports during the application process, which can knock a few points off your credit score. Also, adding a brand-new loan to your credit report will lower the average age of accounts, which could also negatively impact your credit score.\nAs you consider your options, it's important to weigh both the pros and cons to determine the right fit for you. Take some time to run the numbers to ensure it's the best move for your situation. END