Are you looking for a way to leverage the value of your home to get the cash that you need? If so, you may be interested in using a cash-out refinance in order to do it. Here are a few things that you need to know about this type of home refinancing.
You Can Borrow Money At A Low Rate
One of the cheapest ways to borrow money is through a mortgage, especially with interest rates being near historical lows. If you have already built up some equity in your home, it's possible to refinance and get that money out as cash. You'll be making mortgage payments through your lender to repay the loan, but it's possible that the interest rate is much lower than other methods that you would use to borrow the money.
For example, you may find that your new home interest rate is cheaper than what a student loan would cost, which can make it more affordable to pay for a child's college education. You may want that money to renovate your home and add an addition, and find that the interest rate is lower than a home equity loan or personal loan in order to do so.
Some people even utilize a cash-out refinance to pay off their credit card debt that is at a much higher interest rate than what their mortgage is. This allows a cash-out refinance to be used as a form of debt consolidation.
You Can Lower Your Interest Rate
If you bought your home when the interest rates were higher than what they are now, it's very possible that you can get a cash-out refinance and end up with a lower interest rate. This will end up lowering how much you pay per month, making your mortgage more affordable to you in the end. However, if you got your mortgage when the interest rates were lower than what they were today, that low-interest rate may not be possible.
You May Find Alternative Financing To Be A Better Deal
Know that a cash-out refinance may not be the best decision for you depending on how much you need to borrow. If you only need a small amount of money for something like a roof repair, then the home equity loan may actually make more sense. This is because the cost of refinancing will be more expensive in the long run for such a small amount of cash that you need.
Reach out to a mortgage lender for more information about getting a cash out refinance.Share