 TITLE: What Can You Use a Cash-Out Refinance For? CONTENT: Is It a Good Idea to Get a Cash-Out Refinance?\n----------------------------------------------\nA cash-out refinance may be helpful in certain situations.\n1.  It could lower your interest on the loan. If you're considering a cash-out refinance, getting a lower interest rate should be a main goal. And, depending on how much cash you plan to take out, a lower interest rate could save you money over the life of the loan.\n2.  If you plan to make home improvements that will increase your home's value, a cash-out refinance may provide a larger loan than you could get otherwise, often at a lower interest rate than you could find with a personal loan, home equity loan or credit cards. You may also be able to get a tax break using the mortgage interest deduction depending on your project.\n3.  Using a cash-out refinance to help pay college costs for your child could help you cover gaps in financial aid or provide cash at a lower interest rate than a student loan.\nWhile a cash-out refinance can benefit your finances, there are drawbacks.\n1.  You could lose your home. Because your house serves as collateral for the loan, you might face foreclosure if you fall behind on mortgage payments.\n2.  Closing costs could add up to thousands of dollars. Closing costs, such as the loan origination fee, can wind up being 2% to 5% of the amount you've borrowed. These costs could wipe out any money you hoped to save through refinancing at a lower interest rate depending how long you plan to stay in the house.\n3.  Various fees could be attached to the loan. This might include a penalty for paying off your mortgage early. The fee could equal one to sixth months' worth of interest payments.\n4.  You could end up worse off if you use the money to pay off high-interest credit card debt—and then run up the balances again. In that case you'll be paying for the new, higher mortgage and high interest on your credit cards, leaving you in a worse situation than before you got the loan. END