A cash-out refinance loan is a new mortgage that has a balance that exceeds what you owe on your existing mortgage. This type of refinance increases the amount that you owe on your home but allows you to keep the difference in cash. Here are a few examples of when a cash-out refinance is a good idea
A cash-out refinance is a new mortgage that will reset the rate and term of your loan. Whether you select a 15- or 30-year term, the rate will be determined by the market’s current mortgage rates. If these rates are lower than your current rate, a cash-out refinance allows you to access the equity you’ve built up while taking advantage of a lower interest rate.
The cash borrowed from your home’s equity may be used to pay off high-interest debt that you may have. Credit cards often carry much higher interest rates than a mortgage. Eliminating this debt can save you money each month.
Using the funds from a cash-out refinance to update your home by remodeling and renovation is a great option. Investing in home improvements can increase your home’s value. Whether you are making kitchen and bathroom renovations, adding on to the structure or making repairs, a cash-out refinance is a useful way to pay for these upgrades.
These examples are only a few circumstances when a cash-out refinance makes sense. When used at the right time, it can be a tremendous advantage, just like a 2-point conversion. The home loan experts at Standard Mortgage (NMLS#: 44912) have been assuring homeowners make the right play when financing their homes for the past 90 years.