 TITLE: Is Cash-Out Refinancing Better Than a Home Equity Loan? CONTENT: What Is a Cash-Out Refinance and How Does It Work?\n--------------------------------------------------\nA cash-out refinance is a mortgage loan that allows you to borrow some of your home equity by replacing your current mortgage with a new one. The new loan will be for more than your previous balance, and you'll get the difference in cash.\nThe process can be similar to taking out your first mortgage and may require an appraisal to determine your home's value. Generally, you can borrow up to about 80% to 85% of the home's value. However, if your loan-to-value (LTV) ratio is above 80%, you may need to pay for private mortgage insurance on your new mortgage.\nFor example, if your home is appraised for $300,000, 80% of that is $240,000. If your current mortgage balance is $200,000, you may be able to get a cash-out refi for $240,000 and receive the $40,000 in cash.\nYou'll then repay the loan based on the terms of your new mortgage. Similar to a purchase mortgage, you may be able to choose between a fixed and variable rate and often 15- to 30-year terms on your refinance.\nIdeally, you can qualify for a lower interest rate, which will also help you save money. However, closing costs could offset some of the savings. END