 TITLE: Can You Get a Cash-Out Refinance With Bad Credit? CONTENT: What Is a Cash-Out Refinance and How Does It Work?\n--------------------------------------------------\nA cash-out refinance is a loan that replaces your existing mortgage—but with a little extra added on. The new loan will satisfy your old balance, and you'll get the difference in cash. You can do whatever you want with this surplus. People often use it for home improvement projects or to pay off high interest revolving debt.\nTo get a cash-out refinance, the first thing you will need is sufficient equity in your home. Your lender will use your equity amount to establish how much excess cash they'll give you. To get a cash-out refinance, contact your current lender or look online for other lenders you may want to work with.\nThese types of loans might sound like a perfect solution to someone who's strapped for cash, but there are certain pitfalls to consider. Keep in mind that any time you refinance, your new loan will have different terms, so it's important to check the details carefully, such as the new interest rate and fees. If your interest rate goes up, the value of refinancing may not be advantageous over the life of the loan.\nLook out for other costs associated with cash-out refinancing as well, such as closing costs and private mortgage insurance (PMI). A cash-out refinance will have closing costs—which for home purchases are around 2% to 5% of the mortgage amount—and PMI will be charged on loans that exceed 80% of the home's value. These costs alone might make a cash-out refinance more expensive that it's worth, so make sure to dig into the loan's details before moving forward. END