The most common reasons that homeowners pull cash out when they refinance are:
- Consolidate Debt. Mortgage rates are lower than most other types of rates, and with the payment spread over 30 years, it’s more comfortable.
- Home Renovations. Some people use credit cards for home renovations, landscaping, etc, and then consolidate that debt afterwards with a cash out refinance. Why not skip that step?
- Tap Equity without Increasing the Payment. For folks that didn’t refinance in 2020, typically there’s some amount they can pull out without their payment going up. This is a hedge against inflation, to boot.