Whether you’re looking to have funds on hand for home renovations, a well-deserved vacation, or a rainy day, a cash-out refinance can be a great option for homeowners.
A cash-out refinance enables you to use the equity in your home by replacing your existing mortgage with a new one in which the loan amount is larger than it was with the original loan. The new loan amount minus the original loan amount is sent to you (hence the term “cash out”) to be used as you wish.
Read on to gain a better understanding of cash-out refis and to determine if it could be the right choice for you.
The most important factor in considering a cash-out refi is whether or not you can qualify. You must be a homeowner with some equity in your home. You gain equity in two ways: from paying down the principal balance of the home loan through your monthly mortgage payments and/or from an increase in your home’s market value.
Much of your monthly payments go to interest at the beginning of the loan term. Therefore, it can take five to seven years to really begin paying down the principal balance, and it usually takes four to five years for your home’s market value to increase. Our lenders can review your unique situation to determine if you can qualify.
If you do qualify, choosing a cash-out refi comes down to whether you need funds over the near term, for things like medical bills, a vacation, remodels and renovations, or even home refurnishings. It's a great way to leverage cash for anything you need, without using a credit card or other means that often have much higher interest rates.
Cash-out refis are considered secured loans because they borrow against the value of your home. This means they typically come with lower interest rates than other types of loans. Having cash on hand now can make a big difference, especially securing any needed funds as interest rates can increase at any time.
Start tapping into your home’s equity today to get the cash you need for the things you want. Contact one of our qualified representatives to discuss whether a cash-out refi is right for you. And if it isn’t, we also offer home equity lines of credit.