Home>>Mortgage News>> Could a Cash-Out Refinance Be Right For You?
Are you a homeowner looking for extra cash for a project or to pay off debt? Rather than taking out a personal loan or using a credit card, a cash-out refinance could be the answer for you!
What is a Cash-Out Refinance?
A cash-out refinance, as defined by Investopia, is:
“A cash-out refinance is a mortgage refinancing option that lets you convert home equity into cash. A new mortgage is taken out for more than your previous mortgage balance, and the difference is paid to you in cash.”
What This Means For You
If you’ve owned your home for a while, you’re likely building up equity from the portion of your home that you are paying off. The equity from your home will be turned into cash through the cash-out refinance process and be used as an investment into your children’s education, business venture, or even an additional property.
A cash-out refinance can also help consolidate your debts into one place. If you have multiple debts to pay off, you can use the equity from your home to pay them off to eliminate these debts and only worry about one monthly payment.
Based on data from the U.S. Census Bureau and ATTOM, the majority of Americans have a substantial amount of equity right now (see graph below):
Bottom Line
A cash-out refinance could benefit you depending on your situation, giving you the capital you need to fund a big project or pay down debts without taking out a personal loan which could garner a higher interest rate.
Ready to explore your options? Connecting with a licensed mortgage professional who will safely guide you through the housing market can help decide whether this is an opportunity you and your family are a good fit for.
Curious to see what your loan payment could look like? Try our interactive mortgage calculator below:
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