What is a cash-out refinance?

A cash-out refinance is a financial transaction where a homeowner refinances their current mortgage for more than they owe on their property. The difference between the old mortgage balance and the new higher mortgage amount is given to the homeowner in cash, allowing them to access their home equity for personal use. This could include funding home improvements, consolidating debt, or making significant purchases.

The other options do not accurately describe what a cash-out refinance entails. While refinancing for a lower interest rate, refinancing with no additional funds, and refinancing at a fixed term are all valid refinancing scenarios, they do not involve accessing equity in the home. Therefore, C is the correct choice, as it highlights the primary purpose of a cash-out refinance, which is to provide homeowners with liquid cash by leveraging the equity they have built in their property.