When you have a mortgage, and pay it every month, you often tend to look at it as a fixed expense, something to pay every month to keep living in the home. Homeowners often don’t look at the home as an investment that can help you down the road, with the money you have put into your home, along with the increased value, giving you options for how you can save money. What can a cash out refinance do for you?
Let’s just make up a family. We’ll call them the Smiths. They took out a $100,000, 30-year fixed rate mortgage on a $130,000 house in mid-1999. Their interest rate was 7.24 percent, making their monthly payment $681.50 (plus taxes, insurance and other extras).
The Smiths have been happy with this arrangement, so they never thought to refinance, even though rates right now are WAY lower. Now it’s summer of 2017, and they qualify for a rate of 3.27 percent. They still owe $90,000 on their mortgage, but they want $20,000 cash for their daughter’s wedding. They could refinance $110,000 at a cost of $479.94 per month for 30 years, allowing them to pocket the $20,000.
When you’re doing the math, don’t forget that you may have to pay PMI if you’re borrowing more than 80% of the value of the home.
Just remember, it’s YOUR mortgage. You have to make hard decisions on what is important to you. Some people will use their cash out refinance to pay off debts and consolidate credits. This is a great choice because it pays off high-interest credit cards at a lower interest rate, saving money on interest payments. Cash Out Refinances can also be used for improvements on the home. This is a great way to use the equity in your home to improve the home’s value. Many homeowners use a cash-out refinance for the reason above, paying for a wedding. If you need a car, or want a boat or a vacation home, a cash-out refinance is a great way to afford all of these, and a today’s low interest rates, it’s cheaper than ever.
So don’t wait. If you’ve thought about a Cash Out Refinance in the past, or are looking for a Debt Consolidation, right now, interest rates are low. That is subject to change.
Call The Home Loan Expert Team in St. Louis at (314) 781-9700, Chicago at (773) 770-4727, Indianapolis at (317) 550-1515 or Nashville at (615) 810-8555. You can always apply online at www.thehomeloanexpert.com, and we’re also open on Saturdays to better serve you. We work hard to make it easy on you. Nobody gets lower rates on better loans than The Home Loan Expert, Ryan Kelley, why go anywhere else?