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cash-out refinance loan is a way to tap into the equity of your home while also modifying the terms of your current mortgage loan. It works simply. You apply for a new mortgage loan for more money than you currently owe. If you qualify based on your financial credentials and the value of your home, the lender offering the cash-out refi will repay your current home loan and give you some cash back.

Cash-out refinance loans can give you money you need to repay debt, remodel your home, or fund big purchases. But there are risks associated with taking on this kind of debt. Here are three of them.

1. You could end up making your total mortgage repayment costs higher

A cash-out refinance loan changes the terms of your current mortgage loan. This could include both the interest rate and the repayment timeline.