A Rate/Term Refinance with 'No Cash Back' is when you only get enough money to pay off your existing loan plus closing cost and nothing more. You may also include the payoff of a second mortgage if it is more than a year old, and was used as part of the original purchase or improvements of the property.
Remodel / Major Purchase / Pay For College
A "cash-out” refinance can be a good idea for homeowners who want to draw on the equity built up in their property to get cash for a major purchase or for their children's education. However cash out refinancing is more advantageous when the item that was purchased has a similar expected life as the loan. Making improvements to your property or purchasing a second home are examples. Since the interest on a mortgage is comparatively low, borrowing money against your home proves to be very sound. Interest on a mortgage is also usually tax deductible. (Check with your accountant for specific deductions as it pertains to your situation)
Debt Consolidation
An additional or a 'Second' mortgage can be used for paying off high interest debts such as credit cards, personal loans, car loans. The interest on second mortgages is usually tax deductible up to 100% of the value of the property.
Investments
Many individuals choose to use the deductibility of mortgage interest on their primary residence as a means to provide the down payment for investment, or income producing property. Often, mortgage insurance is required for loans with less than a 20% down payment. Using the equity in one property to purchase another could actually save money on a monthly payment with the alleviation of mortgage insurance.
