Building up equity in your home takes time and hard work. Each mortgage payment is an investment. Based on how many payments you’ve made, and the appreciation in value of your property, you may be sitting on a significant pile of cash. According to themarketplace.org, between 2006 and 2018, U.S. mortgage holders have amassed over $6 trillion in equity, the highest total since 2005. Having the ability to tap into that return on your investment may be a helpful way to do many things financially. These goals can be achieved through a cash-out refinance loan.
Here are five reasons a cash-out refinance may be beneficial to you.
Home Improvements with a Cash-Out Refinance
Have you been dreaming of a new kitchen? Updating the bathroom? With a cash-out refinance the funds you need are right at your fingertips. Renovating your home may also increase its value. So, while you initially tap into your home’s equity, you can rebuild that equity by completing any needed repairs or remodeling. Mortgages usually carry lower interest rates as compared to personal loans or credit cards, making this a beneficial option.
Paying for Education Expenses with a Cash-Out Refinance
The average in-state tuition price for a public college is currently $9,410 annually. This price does not include room and board, books, living expenses, or other costs. Attending private or out-of-state schools can drive that cost up to over $32,000 on average. If you have children approaching college age or are considering furthering your education, leveraging the equity in your home via a cash-out refinance may be a good option. With a cash-out refinance you will receive a lump sum of money to pay and save for education expenses.
Purchasing Investment Property with a Cash-Out Refinance
Have you been thinking of buying a condo at the beach? Maybe a lake house or hunting camp? Or a rental home? Using the equity in your current home may be a great way to purchase or make a down payment on a second property.
Funding for Emergencies with a Cash-Out Refinance
Building an emergency fund is a popular and practical part of managing money. A Bankrate survey in 2017 found that 40% of people in the United States have a savings account specifically for emergencies. Accidents, health problems, and unexpected expenses can be stressful. Having cash on hand for a rainy day can alleviate a lot of that worry. Using the equity you’ve built up in your home may be a good source of cash to bolster your savings account. A refinanced mortgage has many advantages over using credit cards in these types of situations. First of all, your mortgage interest may be tax deductible. Also, mortgage interest rates are typically much lower than credit cards, which may be your secondary funding source for emergencies.
Funding Elder Care with a Cash-Out Refinance
With advancements in technology and healthcare, people are living longer. This makes planning how you’ll care for elderly loved ones, as well as yourself and your spouse even more important. There are many options, like long term care insurance, renovating your current living quarters, or a combination of both. Having the funds available to renovate your home to be safe and comfortable as you age is a good option to consider.
Whether you already know you want to refinance your mortgage and get cash out or you are curious if a cash-out refinance is right for you, the experts at Standard Mortgage are here to help. For over 90 years, Standard Mortgage (NMLS#: 44912) has been helping customers experience the dream of home ownership.