Advantages & Disadvantages:
Of course, like most anything, there are advantages and disadvantages to a cash-out loan product. One disadvantage is that they usually have higher interest rates compared to a standard rate and term refinance. On the other hand, even with the higher rate penalty for cash-out this is still almost always the best way to borrow money. Why? Because the interest rate is cheap. It will likely be impossible to find a lower interest rate when cash is needed. The interest rate on a first mortgage is always tax-deductible.
Whereas, if you take out a second mortgage, you cannot use the interest as a tax deduction. The only except is a home improvement loan. For example, if your refinance is for the purpose of paying off credit card debts, you will get a tax deduction on the interest. You would not get this with any other type of loan. A refinance on your first mortgage will be slightly more expensive then taking out a line of credit. However, you can roll those additional costs into your new refinance. It is not as though you need to dip into your savings.
Next, when refinancing in Arizona, you have 3 days to cancel. You have three days to look over the paperwork and be sure that you made the right decision. Even after you sign all of the paperwork at the title company, you still have the right to cancel for three days. You can cancel until midnight on the third day.