Cash Out Refinance
A Cash Out Refinance or Cash Back Refinance is when a borrower takes out a loan, using a piece of real estate as collateral with a balance that is greater than their current loan. The borrower’s current loan is paid off in full and the difference between the two can be used by the borrower.
This cash can be used for various purposes:
- Consolidate high-interest credit card or revolving debt: It’s no secret that credit card debt is on the rise. Not only is this type of debt more toxic to your credit than a home loan, but the interest rates are usually in the double digit percentage range. On top of this, credit card companies will likely try to structure the monthly credit card payments in such a way to where it could take up to 25-30 years to pay off, at double digit rates! With a Cash Out Refinance, you may be able to save money AND help your FICO scores.
- Make home improvements or additions: With record low interest rates, borrowers are looking to the cash out refinance (sometimes called a cash back refinance) to meet their financing needs for their home improvement purposes. Examples of this could be room additions, remodels (such as a kitchen or bathroom), putting in a pool, or even the purchase and installation of solar panels.
- Buy another home for vacation or investment: If you are looking to purchase another home, you may be able to use the equity in your current home to help you accomplish your goals. This will allow you to have the liquid cash you need to make the acquisition much more easily, and possibly even avoid mortgage insurance. Speak with a loan professional today to find out what options are available.
- Pay for college or education: Student loan debt is general considered unsecured debt, meaning that the loan is not holding any asset as collateral can sometimes be a much higher interest rate than a mortgage. On top of this, there may be restrictions in the way the money can be spent. You may prefer the benefits of a cash out refinance or home equity loan over a series of student loans.
- Emergency expenses or large purchase of almost any kind: Sometimes unforeseen events will demand the use of a lump sum of cash for one reason or another. Untapped equity in your home may be a good way to access and leverage your assets in a way that enables you to reach your goals.
As you can see, there are many ways in which you can use the equity in your home to accomplish what you set out to do. Our speedy loan processing times mean you will have fast access to the cash you need as soon as possible. Speak with a loan professional today to see what options make the most sense for you.