eli5: What is cash-out refinancing and why did so many homeowners choose to do this during 2020-2021? Also, are there any hidden dangers in this type of refi that are less talked about?
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I don’t know if I’d call it a danger, but the downside is that you’re starting over on your mortgage. You’re taking the equity out that you’ve put in over the years, which is something you might really need later on in life. You’re cashing in now and hoping it won’t be a bad decision in the future.
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