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Depending on your financial needs, a cash-out refinance can help put money in your pocket and even put money back into your home. Homeowners that have adequate equity in their homes can use a cash-out refi to refinance their home loan to a larger loan, receiving the difference in cash.

This cash can go toward paying off

high interest credit cards, student loans, or even renovations and upgrades which can increase the value of your home and put even more money into your pocket.A popular use for cash-out refis is debt consolidation. While not always the most effective solution, high interest debts such as personal loans and credit cards may be consolidated with a cash-out refi. Consolidation also brings forth a potential tax advantage given mortgage interested may be tax deductible while other forms of interests often are not. Some borrowers choose to use the cash they receive from this type of refinance to make improvements and upgrades to their home. This may lead to an increase in your homes overall value, allowing the cash-out refi to pay for itself or put even more money in your pocket in the long run. Whichever case you consider, make sure to look carefully at the total cost of financing (i.e. closing costs, finance term, etc.) not just the

interest rate.

Use Cash-Out Money for:

Consolidate higher-interest debts. A potential good use ofa cash-out refi is to consolidate high-interest debt, such as credit card debts and personal loans.

There’s also a potential tax benefit

as mortgage interest may be tax-deductible, while interest on personal loans, credit cards and auto loans often isn’t. However, be sure to look at the total financing costs, not just the interest rate. Between closing costs and the potentially longer term, a cash-out refi might not always make financial sense. Pay for higher education. If you have a college-aged child, using a cash-out refi could be a good alternative to taking out private student loans, which might have a higher

interest rate.

Make home improvements or repairs. Using the money to remodel or expand part of your home, or for critical maintenance, could pay for itself by raising the home’s value.

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