What is a Cash Out Refinance and How Can it Help You?
As a homeowner, there are several ways to tap into the equity of your current home, and one of them is a cash out refinancing option. David Lenoir of Coldwell Banker Realty together with Rick Waldron of Guaranteed Rate Affinity share their insights about cash out refinance.
Some homeowners these days are coming to their mortgage specialists for debt consolidation. During the second quarter of this year, credit card balances shot up by 45 billion or nearly 4.6%. Consumer debt is now in excess, or credit card debt specifically, is now in excess of $1 trillion. So homeowners are thinking of consolidating some of their debt through a cash out refinance.
It's a cheaper option and it can significantly lower monthly outflows by quite a bit --- hundreds of dollars and in some cases, thousands of dollars. So leveraging the equity of your current home is a great debt refinancing option. Although each homeowner is going to be in different situations, in some cases you might be sitting at an ultralow interest rate, which a lot of people are, so a home equity line of credit might make more sense.
Contact your finance professional to run through the numbers and see what's best for you. Is it a cash out refinance? Is it a home equity line of credit? But with credit cards, some interest rates on credit cards these days are in excess of 20%, so from a financial standpoint, it does make sense to consolidate debt. It's just a matter of should you do it through cash refinance or other means such as a home equity line of credit.
Refinancing a mortgage can provide several benefits, including the potential to lower your monthly mortgage payments, secure a lower interest rate, and adjust the terms of your loan. In the case of a cash-out refinance, you can also access cash from the equity in your home and use it, for example, for debt consolidation.
Want to know more about the pros and cons of cash-out refinancing, and tips on how to determine if it’s the right option for you? Please feel free to reach out.
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