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 Unlike some types of loans, mortgage and home equity loans use your home as collateral. If you can’t afford the higher house payments on your new loan, you may lose your home in foreclosure.

 If interest rates rise, refinancing at a higher rate or for a longer term results in paying more for your current home — potentially, tens of thousands of dollars more — than if you had kept your old, lower-interest loan.

 Frequent refinancing can cost you thousands in closing costs that may take you years to recoup.

The easiest way to unlock a chunk of equity is to refinance your home, giving you a whole new mortgage, paying off the old mortgage, and leaving you the rest. Ideally, you refinance a mortgage not only to cash out equity for investment capital but also to snag a lower interest rate or shorter term, so you pay less interest over the life of the loan.

Suppose that you have a $200,000, 30-year mortgage at 8 percent with a monthly house payment of $1,467.53. You’ve owned the house for 10 years and still owe $175,000 on the mortgage. If you refinance for $250,000 (the home’s current appraised value) and take out a 20-year mortgage at 4.5 percent, now you have a house payment of $1,581.62 and you walk away with the $75,000 equity that was locked up in the house (the refinanced amount of $250,000 minus the $175,000 to pay off the old mortgage) to use as investment capital.