Is a Cash-out Refinance Mortgage Right for Me?

Posted on December 1, 2022 by Anthony Bird - Local Michigan, Mortgage Rates, Refinance

What is a Cash-out Refinance Mortgage?

A cash-out refinance mortgage is a type of home loan where the borrower takes out additional cash beyond the amount due on their existing mortgage. The extra cash is used to pay off debts, make home improvements, or for other expenses.

What are the Benefits of a Cash-out Refinance Mortgage?

There are several benefits to taking out a cash-out refinance mortgage. First, it can help consolidate multiple debts into one monthly payment. Second, it can lower your interest rate and monthly payments. Third, it can provide you with extra cash for home improvements or other expenses.

What are the Drawbacks of a Getting Cash from Your Equity?

There are also some drawbacks to taking out a cash-out refinance mortgage. Just like any mortgage refinance, you may have closing costs including title company fees, appraisal and underwriting fees.

Typically cash-out mortgages have slightly higher rates than purchase loans. Lower credit scores may also affect the interest rate. Lastly, refinancing your mortgage would restart your mortgage term which may lead to you taking longer to pay off your loan.

What are the Qualifications for a Cash-out Refinance Mortgage?

To qualify for a cash-out refinance mortgage, you will need to have good credit and equity in your home. You will also need to prove that you can afford the new monthly payments. Underwriters will review income, credit and the condition of the property to make sure it meets program guidelines.

Tips for Making the Most of a Cash-out Refinance Mortgage

Cashout refinance to do debt consolidation

Using cash from your home’s equity may be a wise investment. Mortgage rates are often low rate fixed mortgages. Being amortized over 15 year or 30 years, your monthly payments may give you lower overall payments than other loan options.

Cash-out refinance mortgage to complete home improvements

Here are some ideas to make the most of the cash from your home’s equity:

Use the extra cash to pay off high-interest debt.
Use the extra cash to make home improvements that will increase the value of your home.
Use the extra cash to invest in your education or start a business.
Use the extra cash to build an emergency fund.
Use the extra cash to buy a vacation home or rental property.

How Long Does it Take to Get Money from My Home’s Equity?

When refinancing your home, the loan process is quite quick. For most borrowers, your loan should close in 2 to 3 weeks. You would then get your cash from your closing after the 3 day rescission period.

Your funds can be direct deposited into your account or mailed to you as a check. Simply tell the mortgage closer what payment method you prefer.

How to Apply for a Cash-out Refinance Mortgage

Applying for a cash-out refinance mortgage starts with an online application here: Apply Online

If you would rather apply over the phone you can call a licensed loan officer at 800-555-2098 to get started.

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