Still Confused on the Concept of Refinancing

[Kris Mo]

Hey BP,

I've done some google searches and searches on the forum but still couldn't find the answer.

Example:

Total Loan Value: $200k

Mortgage Left to Pay: $100k

Appraised Value of House: $300k

So this means I have paid off $100k of the original $200k loan which means I have $200k ($100k in appreciation + $100k paid off) in equity.

Lets just assume 100% LTV for easy numbers. I would go to a bank and ask to refinance. The bank would see that my home is work $300k so gives me a $300k loan and uses my home as collateral. With the $300k, I would pay off my original mortgage of $100k and have $200k leftover.

This is where I'm confused. How is the $200k leftover profit? Don't I now have a $300k mortgage/loan with the bank I refinanced with monthly due payments for the $300k loan?

I hope this made sense.