Home Equity Refinance

Refinancing current mortgages can offer borrowers a large sum of cash from the equity in their home. If potential franchisees can refinance the current mortgage on their home at a lower interest rate, and for an amount higher than what they owe, they are able to pocket the difference in cash.
This money can be used to finance the purchase of a franchise.

This method is sometimes called cash-out refinancing. It differs from home equity loans and lines of credit in that it replaces the first mortgage completely, rather than adding a second mortgage or line of credit to the original mortgage. Refinancing should only be done in certain circumstances. If property values have risen and a better rate would be available for the new mortgage, it makes sense to refinance. Additionally, those with two current mortgages may be able to consolidate them when refinancing.

Refinancing, as a general rule, is probably not the best option for borrowers who want to borrow more than 80% of the value of their home. In that case, borrowers will often face the added expense of private mortgage insurance.