Cash
Out Refinancing
Refinancing
is to pay off your existing mortgage with another one at a lower rate.
A
cash
out refinance is refinancing your existing mortgage and borrowing
some of your equity in a lump sum to use for other purposes. Such as home
improvement,
college tuition, family vacation, etc.
Other
reasons people use a cash out refinance is to use the equity
in their home to invest
in real estate, or start their own business.
Cash
out refinances are very good tools when used for the right reasons. It
is not wise to do cash out refinancing if you are going to receive a higher
interest
rate than what you already have on your current mortgage.
If you have a really good rate on your current
mortgage, it would be wise to leave it alone.
However,
if you are looking to tap into the equity you have acquired in your home
without touching your current mortgage, you may want to consider a Home
Equity Loan.
With
a home equity loan you can borrow the equity you have acquired without
touching your first mortgage. The home equity loan is also referred to
as a second
mortgage.
For instance, if you have acquired $50,000.00 worth
of equity in your home, you can borrow what you need of that equity, without
your first mortgage being affected.
The cash out refinance and the home equity loan
are very similar and serve almost the same purpose, your situation should
determine the right choice for you.
As
always, I want to leave you with this reminder. Do your homework, educate
yourself, and shop
around for the best deal.
ARM
Loans
Fixed
Rate vs. Variable Rate Mortgages
Interest
Only Loans
Mortgage
Closing Costs
Refinance
Reverse
Mortgage
Prepayment
Penalty
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