Using a Home Equity Line of Credit (HELOC) gives a borrower access to a line of credit based on the available equity in a home and functions somewhat like a revolving credit card. It requires a 2nd monthly payment and features an adjustable interest rate. That means if interest rates go up, your monthly payment would also increase.

A Cash-Out refinance can have a fixed interest rate, so you could have a fixed mortgage payment for the life of the loan. With a HELOC, you have a line of credit with the ability to make withdrawals and a fluctuating interest rate. Your HELOC payment depends on how much you borrowed and the interest rate at the time you make your HELOC payments.

Why Cash-Out refinance?

Cash-Out refinancing is usually more attractive to those homeowners who have too much of their wealth tied up in their home and don't have the cash assets on hand that they would like. Homeowners also tend to consider cash-out refinancing when interest rates are low.

If you've been thinking about getting a Home Equity Line of Credit, consider a Cash-Out refinance to access your home equity. You may want to use some of the money invested in your home to eliminate other debts, like credit card balances or to contribute to your children's college tuition bills. Perhaps you're looking to self-finance home improvement expenses or pay medical bills. You may even prefer to use it to fund vacation homes, a rental property, or start a business.

It should be noted that there is a big difference between using money from cash-out refinancing to pay for home renovations or debt consolidation, which are more of an investment in your home and can potentially increase the value, versus using the funds to buy a new car which has no return on your money.

A Cash-Out refinance could help you:

• Access a lump sum of cash

• Pay student loans

• Pay off medical bills

• Finance a wedding

• Take a vacation

• Make home improvements

• Pay for elderly care

• Buy an investment property

• Pay for college

• Pay down debt and improve your debt-to-income ratio

• Get a lower interest rate

• Improve your financial situation

• Have simple interest instead of compound credit card interest

Cash-Out Refinance Requirements

A Home Improvement loan is a type of Cash-Out refinance that allows you to use your home's equity to finance improvements or modic

• Removal of lead-based paint

• Decks, patios, porches

• Basement completion

• Basement waterproofing

• Updates to a septic or well system

• New kitchen appliances

• Washer and dryer upgrades

• Plumbing and electrical upgrades

• Minor kitchen or bathroom remodeling

• Restoring windows or doors

• Weather stripping and insulation upgrades

• Disability improvements

• Energy efficient upgrades

• Approval

• You could get cash within 3 days of loan funding