Lower Your Rate
Refinancing to a lower interest rate can lead to significant long-term savings and reduce your monthly mortgage payments. By securing a better rate, you can save money over the life of your loan, freeing up funds for other financial goals or investments.
Pay Off Debt
Consolidate your high-interest credit card debt with a cash-out refinance. By tapping into your home’s equity, you can pay off outstanding debts and enjoy a single, lower-interest monthly payment, simplifying your finances and reducing overall interest costs.
Lower Mortgage Payment
Reduce your monthly mortgage payment with a simple refinance. By adjusting your loan terms or securing a lower interest rate, you can save thousands of dollars annually, making your mortgage more affordable and easing your financial burden.
What is a Cash-Out Refinance?
As you pay off your mortgage, you gain equity in your home which you can use to your benefit. Equity is the difference between what you owe on your mortgage and the value that your home is worth. For example, if you owe $100,000 on your mortgage and your home is valued at $200,000, then you have $100,000 of equity.
Equity can be gained in two main ways—your home increasing in value, or by paying down your mortgage principal. With a cash-out refinance, you utilize the equity you’ve built into your home, borrow more than you owe on the mortgage, and get cash for the difference. This type of refinance is very helpful for homeowners who want to make more expensive home repairs or anyone who needs extra funds for unexpected expenses.
Benefits of Cash-Out Refinance
A refinance with cash-out can be beneficial in many ways. First, you can do anything with the funds that you take from your equity—like paying off debt, renovating your home, or paying for expensive life events. Additionally, cash-out refinancing provides unique advantages over personal loans or second mortgages, including:
- Providing funds for renovations, home improvements, and home repair costs
- Accessing funds that can be used for life events such as vacations, medical bills, college tuition, and more
- Establishing better lines of credit with lower interest rates compared to personal loans or credit cards
- Consolidating and paying down debts with a single, lower-interest payment
Things to Consider Regarding Cash-Out Refinancing
Although there are many benefits to a cash-out refinance, you should be aware of several important factors.
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How much do you need?
First, consider how much money you need to receive from the cash-out refinance. Keep in mind that most lenders will require homeowners to leave some equity in the home—at least 20 percent in most cases(with the only exception being VA loan refinances with cash-out, which don’t require borrowers to leave any equity). This means if you have $50,000 equity in your home, you likely will not be able to use the full $50,000.
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How long to receive funds?
It’s also important to know that you also will not get cash immediately—the process of a cash-out refinance takes time. Expect to see funds between three and five business days after closing.
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What are the costs?
Another factor to bear in mind when considering a cash-out refinance is that you’ll likely have to spend some money upfront on closing costs and appraisal fees. Lenders’ requirements and fees may vary, but our Experts can help you understand what you should expect to pay.
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What are the terms?
Finally, and most importantly, remember that when you get a cash-out refinance, you likely will have different terms than your original mortgage. This is because you pay off your original mortgage and get an entirely new loan in its place. This means you can see an increase in the time left in your mortgage or different interest rates—both of which can impact your financial future.
The Process of a Cash-Out Refinance
Although its uses are different from that of a new home loan, the process of acquiring a cash-out refinance is similar to that of a traditional mortgage. To get the process started, you’ll need to ensure you meet certain criteria set by your lender. This can include:
- Equity in your home, 80 percent of which is equal to or more than the amount of cash-out you’re seeking
- A minimum credit score of 620
- A debt-to-income ratio of less than 50 percent
- Financial documentation
- Proof of income
Once you’ve compiled all of the necessary information and comparison shopped with various lenders, you’ll follow the lender’s approval process and underwriting to establish your cash-out refinance.
Let The Home Loan Expert Help!
Whether you’re in need of renovations to your home, significant home repairs, or you’re looking to access extra funds for any unforeseen events, a cash-out refinance can be a great method to get the money you need to achieve your goals.
Cash-out refinances are debt consolidation made easy. Refinancing with a cash out can help you lower your debt, decrease your monthly payments, and (hopefully!) relieve some stress in your life.
At The Home Loan Expert, we’ll close your cash-out refinance in as little as 14 days and get you the cash you need, fast. And with a refinance cash out, you can choose between adjustable and fixed rates, with loan terms ranging from 5 to 30 years.
With our easy-to-use mortgage calculator, you can easily get an idea of the loan options available to you. And our team is always ready to discuss your unique needs to find the right loan for you! Contact us to see how a cash-out refinance can help you utilize your home equity to achieve your financial goals, fast.
Learn About Other Loan Types
Adjustable Rate Mortgage
When you’re shopping for a new home, one of your most important decisions will be what kind of mortgage to take out to finance your home. Your mortgage type will be the top factor that influences how much you can borrow(and thus what kind and size of home you purchase), as well as your monthly budget moving forward. For a variety of reasons, an adjustable-rate mortgage (ARM) can be an appealing choice in the short term, but it can seem scary as well. However, it’s important to understand how ARMs work, since this type of loan has repayment terms that may become less desirable over time.
FHA Loan
The home buying process can be overwhelming and stressful, especially if you’re buying your first home (or if your financial circumstances make it more difficult to get an affordable loan). For many home buyers, getting a loan insured by the Federal Housing Administration (FHA) can be extremely helpful in not only securing the necessary financing to buy but also achieving the dream of owning a home (even while facing tough financial situations). FHA loans allow lenders to make home buyers better deals, resulting in lower down payments, lower closing costs, and easier credit qualifying. Here, we’ll go over the ins and outs of FHA loans, including what they are, who qualifies, and what the process of securing one looks like.
Fixed-Rate Loans
Fixed-rate mortgages—also called “conventional mortgages”—are basically the bread and butter of the mortgage industry. And that’s because this loan type is still the most reliable way to finance your home, offering affordability, flexibility, and so much more. As their name suggests, fixed rate loans have the same rate throughout the entire term of the loan. So even if interest rates rise while you’re paying off your loan, your rate and payment amount are locked in for the entire loan term. That’s why fixed-rate mortgages are so popular–they offer protections that ARMs can’t.
