Home values are rising, so mortgage refinancing is popular again. But we have some words of warning about cashing out.
Anna Maria Andriotis wrote about it for The Wall Street Journal:
In a cash-out refinance, borrowers can withdraw equity from their homes at the same time as they alter the interest rate on the mortgage. The transaction typically gets more popular when home values rise, as newly confident borrowers look for a way to cover home repairs, reduce debt or pay expenses such as college tuition or travel...
Borrowers who fall behind on credit-card payments don't risk losing an asset, while borrowers who fall behind on home loans risk foreclosure. Take particular caution before using a cash-out refi to fund a vacation or another big-ticket purchase.
Do you have questions about refinancing your mortgage? Comment below.