This article was originally published by Anthony Duval on Bluefire Mortgage
A cash-out refinance replaces your existing mortgage with a new larger one, so you can use the money however you want 😉🏡
In other words, this type of loan essentially turns home equity into cash.
A Cash-Out Refinance lets you access your home equity through a first mortgage instead of through a second mortgage, like a home equity loan or line of credit. Typically you will need to have 10% to 20% equity left after the refinance. The percentage required varies by lender and whether you’re willing to pay for private mortgage insurance (PMI) on the new loan.
- It allows you to borrow a lot of money at a low interest rate
- Your mortgage interest may be tax deductible
- Your new mortgage may have a lower interest rate than your current mortgage
- You can use the cash however you want
- It can help eliminate high-interest debt, pay for college or make your home nicer
- Any cash you put toward repairs and improvements could increase your home’s value even more.
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A Cash-Out Refinance lets you access your home equity through a first mortgage instead of through a second mortgage.
- Debt Consolidation – pay off a HELOC, credit cards, car loans, student loans.
- Home Maintenance – repair your roof or replace your water heater.
- Home Renovations – complete the kitchen or bathroom remodel you’ve always wanted.
- College Tuition – use funds to pay for your children’s educational expenses.
- Save – keep the cash to have on hand for emergencies or special events.
- Reinvest – use the cash for a down payment on another property or second home expenses.
- Invest – add to or start other investments that provide a higher return than a new mortgage cost.
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With a Cash-Out Refinance you can complete the kitchen or bathroom remodel you’ve always wanted!