If you currently own a home and there is equity available in the home, you can refinance your current mortgage balance into a larger mortgage and receive the difference in cash. If you decide you want to refinance and get cash out of your home, you will need to speak with a lender and make sure you qualify for a new loan.
Is It Right For Me?
There are few things you should know about how a cash-out refinance works if you are considering moving forward with this type of home loan. This new loan will pay the difference between your previous mortgage balance and the new mortgage balance. The amount you can receive will be based on the value of the home at the time of refinance.
One reason people choose to go this route is because they want to use the cash in order to make home improvements. Home improvements will increase the value of the home, so a cash-out refinance can be a good decision if you plan on selling the home in the future. If the increase in value is significant, you may even end up with extra cash in your pocket.
Another reason people want to get cash out when they refinance is to pay off debt. If you happen to have high interest credit cards or loans and want to pay them off in one lump sum, a cash-out refinance might be the best decision for you. It could save you money in the long run from paying interest on credit cards and you could use that money saved to invest back in the home or to pay off the new loan.
This also could help to raise your credit score because you won’t have as much debt overall. Increasing your credit score can help you a lot in the long run especially if you were to lose a job or have an emergency where you need a credit card immediately.
Lastly, mortgage payments are tax deductible so that means that the money from a cash-out refinance can get you a better refund by lowering your taxable income.
Things To Consider
Since you are refinancing your current mortgage into a larger one, it is going to take you longer to pay off your home, or you will be making larger monthly payments. If you choose to keep your payments at roughly the same amount, you will be paying added interest over the life of the loan. It is important to keep this in mind when deciding on a cash-out refinance and what to use the cash on. Using the cash for luxury items or vacations is never a good idea.
Another thing to consider in a cash-out refinance is the interest rate and closing costs. These are things you should always consider when discussing a refinance. The interest rate and closing costs should be factored in when reviewing the terms of the refinance to make sure it’s worth doing.
Reach Out Today!
If you think a cash-out refinance is a good idea for your future, make sure to review your finances and weigh out all your options. Also, consider the reason you need the cash and if you need it now or if it can possibly wait. We want to make sure you are making the best decision for you, so please contact North Georgia Lending in Cumming, GA today!