Open Question: explain basics of mortgage refinancing to me please...?

[Administrator]

let's say that i bought a 100,000 dollar house two years ago. for the sake of simplicity, i put no money down and i borrowed all of the money for the house from the bank. now (after two years), i have 20,000 dollars of equity in the house and i still owe the bank 80,000 dollars. the value of the house has doubled during this time to 200,000 dollars.how would refinancing work in this example? i would borrow 80,000 from someone else but i would get a lower rate b/c i now own a 200,000 house (instead of a 100,000 dollar one)?and how does "cashing out" work?thanks.


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