Question: What is a cash out refinance?
Are you looking to make improvements to your home?
Do you need to have some extra cash in the bank?
Perhaps to pay off a car loan?
Maybe you want to buy a car outright?
Do you have tuition to pay?
Well, getting a cash out refinance of your home mortgage just might be the answer you are looking for.
So what is a cash out refinance?
A cash out refinance is when you refinance your home for what it is worth, but that amount is more than all of the liens or debts against the house and any fees that might have to be paid in accordance with the refinance added together - leaving you extra money to take care of those necessary and sometimes pesky bills, loans, or needed improvements or repairs to your home.
You may want to instead take out a refinance loan that will pay off the existing home mortgage but leave you with a specified amount of cash left for your other expenses. This way you are not borrowing more than you need against your home.
How do you go about getting a cash out refinance?
1: Need vs. Equity
Determining how much cash you need and how much you have to borrow against (the value of your home) will help you to understand just where you stand when it comes to a cash out refinance. What bills or loans do you have to pay? What repairs need to get done? How much cash do you want to have on hand for emergencies?
Make sure that you have enough equity in your home to cover this. If not, a cash out refinance might not be the right option for you. Make sure to do the math so that you know how much your mortgage payment is going to be affected every month, and make sure this new total is affordable for you.
Search around online to find a bank or lending institution that matches your needs and offers what you're looking for as far as refinancing home mortgages. You will need to have financial paperwork in order to apply for most loans so have everything organized!
3. Finish up
It can take anywhere from just a couple of weeks to a couple of months to close out your loan, depending on the type of loan and the lending broker or bank you chose so patience is key!
4: Spend Your Cash
Use your now available funds to pay off those bills, make those repairs or improvements, or whatever you may need it for.
Now that you know what a cash out refinance is, be sure to find a good mortgage broker to help you find the best mortgage rates.