Whatever you need money for, a cash-out refinance option can give it to you. Take advantage of the stored-up value of your home and squeeze some extra money out of it.
Home repairs? Unexpected expenses?
How does Cash-Out Refinance work?
With this refinance option, you’re replacing your current loan with another (usually a larger) one, and you get the difference between the two loans in cash.
Did You Know?
You can get ahead financially if you spend the amount you get from going cash-out wisely – for example, by paying off other debts.
So, what does it look like?
Let’s say you own a home that is worth $250,000 and still owe $150,000 on your current mortgage. In this scenario, you’ve already built up a stored-up value of $100,000 for your home. This amount is called equity and with cash-out refinance, you can liquidate a part of it by securing a new mortgage that is worth more than your current debt.
To illustrate how it works here’s a simple formula:
Your current mortgage debt + The amount you need in cash = Your new loan amount after refinance
You can use this money for whatever you like, however, it is advised to use it for increasing the value of your home or paying off other debts.
You’re a first-time home buyer and looking to settle down for longer periods of time.
You’re seeking the predictability of fixed payments.
You’re looking for a loan that lets you set your household budget.
You have adequate credit. Otherwise, an Adjustable Rate Mortgage might suit your needs better since its initial interest rates are usually lower.
If you’re thinking about applying for a Cash-Out Refinance, our experts are more than willing to help you.
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