 TITLE: Should I Do a Cash-Out Refinance to Pay Off Debt? CONTENT: What Is a Cash-Out Refinance?\n-----------------------------\nA mortgage refinance loan allows you to replace your current mortgage loan with a new one. Many people refinance their mortgage loan to get a lower interest rate and monthly payment. But as the principal amount of your loan goes down and the value of your home appreciates, a cash-out refinance also allows you to tap some of the equity you've built.\nFor example, let's say you currently have a $250,000 mortgage balance on a home worth $400,000. Many lenders will let you borrow up to 80% of the home's value, so you could potentially refinance your loan for up to $320,000.\nThe difference between the new loan amount and the original loan balance is what you'd receive in cash. You can use that money for just about anything you want, including:\n*   Debt consolidation\n*   Home improvements\n*   Emergency expenses\n*   Retirement savings\n*   Education savings\n*   Other major expenses\nJust because you own a home, though, it doesn't mean you're eligible for a cash-out refinance. For starters, you'll need to have enough equity in your home to meet lender requirements—such as the 80% loan-to-value ratio.\nLenders will also consider several other factors, including your credit score, credit report items, debt-to-income ratio, income, job security and more.\nIt's possible to get a cash-out refinance with bad credit, but not all lenders specialize in working with subprime borrowers, and you may need to meet other eligibility criteria to qualify for a loan. END