Cash-Out Refinance Benefits
- A lump-sum of money available for home repairs and improvements
- An opportunity to secure a lower interest rate
- The possibility of maintaining a similar monthly mortgage payment
- An alternative to using high-interest credit card financing
What is a Cash-Out Refinance?
It’s a refinance of an existing mortgage that enables you to access some of the equity in your home. The new loan is for more money than you owe on your current mortgage, and you receive the difference in cash.Funds from a Cash-Out Refinance may be used to:
- Finance home improvements or other major household projects
- Pay for a wedding, college tuition, medical bills, or other large expenses
- Pay off high-interest credit cards or auto loans
- Invest in an additional property or business venture
- Maintain extra cash for emergencies
Cash-Out Refinance vs. Home Equity Loans
A Cash-Out Refinance is a new, first mortgage. A Home Equity Loan and a Home Equity Line of Credit (HELOC) are two alternatives that allow you to access cash through a second mortgage while your current mortgage remains unchanged. A Cash-Out Refinance may offer a lower interest rate and simpler terms. However, if the amount of equity you want to access is small, a Home Equity Loan may make more sense.
How do you determine the best option? It depends. One of our knowledgeable Mortgage Consultants can help you explore both options and find the one best suited to your individual financial situation.