One of the more popular re-financing options that are available to homeowners today is the cash out re-finance. Why? Because it gives you the ability to take out the cash equity in your home, and re-finance this amount along with the existing loan balance, at a much lower interest rate.
Here’s a good example of how the cash out re-finance option works. Let’s say that you own a home that has a current value of $200,000 and it has a 7.5% mortgage on it. Your current loan balance is $100,000. With a cash out re-finance you could get $100,000 in cash equity, and re-finance that amount along with the $100,000 current loan balance into a new loan at the current interest rate of 5.50%.
So, you’ll have the cash you need along with a new low interest home loan that will save you a substantial amount of money for years to come in the future.
What can you use the cash for?
That’s one of the better aspects of a loan like this. There are no restrictions on how you can use the cash equity. It can be for anything you desire, including:
-Start and complete a home improvement or remodeling project
-Debt consolidation to pay off all your bills and debts
-Pay off unexpected medical expenses
-Pay for your children’s college tuition and expenses
-Fund that small business you have been wanting to start up
-Buy a new car or take a dream vacation with your family
While you have the ability to use the money for whatever use you want to, it’s advisable to use it wisely and in your favor.
One of the other big benefits with a cash out re-finance is that in most every case the funds will be tax deductible. This includes things like using the cash for a major home improvement project. Of course, you should always consult with your tax advisor, but this is just one example of how advantageous a cash out re-finance can be.
Finding a lender for this type of loan is not really difficult. Many banks and mortgage companies look favorably on these kinds of loans since your home is used for collateral. This makes for a much easier qualifying process even if you have less than perfect credit, so don’t let that stop you from moving forward. You can do a search on the Internet and compare several different lenders in regards to interest rates, terms, and conditions. Check them out and make sure they are reputable first.
If you’re looking for a good option in getting your hands on the cash from your home’s equity, a cash out re-finance may very well be the perfect solution.
