Cash-out refinancing allows the borrower to do what?

Cash-out refinancing allows the borrower to obtain cash from the equity of their home, making it a viable option for homeowners looking to leverage the value they've built up in their property. In this process, the borrower refinances their existing mortgage for more than the outstanding balance and receives the difference in cash. This extra cash can be used for various purposes, such as home improvements, debt consolidation, or other financial needs.

The cash-out option is particularly beneficial because it allows homeowners to access funds without having to sell their property. It essentially transforms part of the home’s equity into liquid assets.

Other scenarios, such as taking out multiple loans at once or refinancing for less than what is owed, do not characterize cash-out refinancing. Additionally, converting a short-term loan to a long-term loan is also not synonymous with cash-out refinancing, as it does not involve accessing equity in the property. Thus, option C accurately captures the essence of cash-out refinancing.