Cash-out refinancing gives you the possibility to use your home equity to get a lump-sum payment. Our post on How does a home equity loan work might help you to understand the process. While covering the first mortgage according to the rules of refinancing, you take out a new mortgage on the new terms. Generally, you will get lower interest rate and some other benefits.
You receive the money when your refinancing is closed. The balance of your new loan will be calculated as a sum of your previous loan balance and the cash-out amount you want to get. Thus, you get a higher balance of the new loan and increased monthly payments.
Choosing the type of cash-out refinancing you can think about the two possible interest rates options. You can get either adjustable-rate or a fixed-rate mortgage. Make your decision considering your financial situation and plans for the future. Also, make sure you will be able to cover higher monthly payments.
You might also like to know How to get a refinancing home loan?