What are cash-out refinances?
When people hear the word refinance, the first thought that comes to mind may be a lower mortgage rate. However, there are other benefits that you may want to consider, such as taking cash out of your loan. This type of refinancing is a cash-out refinance. Essentially, cash-out refinancing allows you (the borrower) to replace your existing mortgage with one that is higher. Once you close on your new loan, the difference between your previous loan and your new loan is given to you in cash to spend as you wish!
Why do people choose a cash-out refinance?
There are many reasons why someone may prefer a cash-out refinance compared to a rate-and-term refinance:
1. Home Improvements
Have you ever considered building an addition to your home? How about splurging on an inground pool for your backyard? Cash-out refinancing can make those dreams a reality. Rather than taking out a second loan for these projects that could be more of a hassle and potentially a higher interest rate, you can move forward with a cash-out refinance.
2. Consolidate High-interest Debt
Another reason why people choose a cash-out refinance is to consolidate their debt. Whether it be an auto loan or credit card bills, cash-out refinancing could be a great way to pay off higher-interest loans. Rather than worrying about balancing several loans, you can pay them off with the cash received from your refinance. Keep in mind that individuals with too much debt may not qualify for a cash-out refinance.
Is a cash-out refinance right for you?
If you’re debating between a rate-and-term or a cash-out refinance, our Loan Pros are a phone call away and can answer any questions you may have. Rosegate will never recommend anything that is not in your best interest. Once you are ready to move forward, apply in 10-15 minutes, and we will have you refinanced within 2-3 weeks.
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