For those homeowners fortunate enough to have equity in their home, they have the option of pulling that equity out and turning it into cash. The homeowner can then use this money however they choose. Maybe they want to build an addition onto the house, or build a pool, or pay off debt, etc.

A cash-out refinance is different than a home equity loan because the cash-out refinance replaces your first mortgage. The home equity loan is a separate loan on top of your first mortgage. For this reason, most people will cash out refinance only if they can lower their interest rate and will do a home equity loan if interest rates are higher. In certain interest rate environments, a borrower can do a cash out refinance and lower their monthly payment. When deciding whether or not to pursue a cash-out refinance keep in mind that the new loan will require closing costs, and might extend the term of the original loan.

When considering pulling equity out of your home, make sure to first consult with a GMG loan officer. They will give you the pros and cons of such a transaction and allow you to make an informed decision.