Getting cash out of a refinance means that you are increasing the amount owed in your new mortgage above what you owed in your previous mortgage, and pocketing the difference. That additional money can be used for debt consolidation, replacing high-interest credit cards with a low-interest home loan. You can also use it to improve your home, increasing your home’s value.
Home owners who were upside down on their mortgages were previously not eligible for cash out mortgage refinancing, and in fact often needed to contribute extra money at closing just to get a refi. With the HARP 2.0 program, however, homeowners are allowed to get a mortgage up to 200% of the value of their home, so even severely underwater home owners are able to get cash back loans.