In most cases, a refinance of the first mortgage loan can be the best way to cash out the property's equity for debt consolidation.
Interest rates for first mortgage loans normally have lower interest rates than home equity and second mortgage loans. The borrower also receives the advantage of only one mortgage payment, instead of two.
However, conforming programs limit cash-out refinances to only 75%-80% of the property's value. Nonconforming programs do allow cash-out refinances to 100% of the property's value—at higher interest rates. For more information, please review the "Refinance Loans" article in this section.
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