A cash-out refinance is a mortgage refinancing option that allows homeowners to borrow against the equity in their home. This process involves replacing your existing mortgage with a new one for a larger amount and taking the difference in cash.
Key Features of a Cash-Out Refinance
- Access to Cash: Homeowners can receive cash based on a percentage of the equity they have built up in their home. This can be used for various purposes, such as home improvements, debt consolidation, or other major expenses.
- Loan Amount: Typically, lenders will allow you to borrow up to 80% of your home’s appraised value, minus any outstanding mortgage balance.
- Interest Rates: Cash-out refinance rates may be higher than those for standard rate & term refinancing, but they can still be competitive compared to personal loans or credit cards.
- Closing Costs: Just like any mortgage, cash-out refinances come with closing costs.
- Impact on Equity: While you can access cash, taking out a larger loan will reduce your home equity and may increase your monthly mortgage payment.
Pros:
- Access to substantial cash for major expenses or investments.
- Potentially lower interest rates compared to other types of loans.
- Can consolidate higher-interest debt into a single, lower-interest mortgage
Cons:
- Increases your mortgage debt and monthly payments.
- Will involve closing costs.
- Risk of foreclosure if unable to make payments, as the home is collateral.
- A cash-out refinance can be a valuable financial tool for homeowners looking to leverage their home equity for various needs. However, it’s important to consider the long-term implications and ensure it aligns with your financial need and goals.
WE CAN HELP WITH CASH-OUT REFINANCING
Are you wondering whether you can do better than your current mortgage? If so, there’s only one mortgage company you need to turn to: Local Lending Oklahoma. Our mortgage brokers are experts in all kinds of refinancing options, including cash-out refinancing.
When you choose to do cash-out refinancing, you take out a new loan for more than the original loan balance. The difference between those two amounts is then paid to you in cash, converting your home equity into money you have access to right away. And, in general, the terms of a refinanced loan are going to be more favorable to you – with lower monthly payments, lower interest rates, and other potential adjustments.
MORTGAGE PROFESSIONALS SERVING OKLAHOMA CITY, OK & BEYOND
If you’re interested in learning whether cash-out refinancing is right for you, get in touch with our office or fill out an application online. Since 2017, Dean “The Mortgage Machine” Slatev and his team have been serving the Oklahoma City, OK area with superior one-on-one loan guidance – and we would be happy to do the same for you! Get started with a free, no-obligation application today.