A Cash Out Refinance or Cash Back Refinance is when a borrower takes out a loan, using a piece of real estate as collateral to pay off or consolidate debts, make home improvements, buy another home for vacation or investment, pay for college or education, or just for cash on hand to be used for an emergency or even for recreation.
This cash can be used for various purposes:
- Consolidate high-interest credit cards, revolving debt or other debt: It’s no secret that credit card debt is on the rise. Not only is this type of debt more toxic to your credit than a home loan, but the interest rates are usually in the double digit percentage range. On top of this, credit card companies will likely try to structure the monthly credit card payments in such a way to where it could take up to decades to pay off, at double digit rates! With a Cash Out Refinance, you may be able to save money AND help your FICO scores.
- Make home improvements or additions: With record low interest rates, borrowers are often looking to the cash out refinance (sometimes called a cash back refinance) to meet their financing needs for their home improvement purposes. Examples of this could be room additions, remodels (such as a kitchen or bathroom), putting in a pool, or even the purchase and installation of solar panels.
- Buy another home for vacation or investment: If you are looking to purchase another home, you may be able to use the equity in your current home to help you accomplish your goals. This will allow you to have the liquid cash you need to make the acquisition much more easily, and possibly even avoid mortgage insurance. Speak with a loan professional today to find out what options are available.
- Pay for college or education: Student loan debt is generally considered unsecured debt, meaning that the loan is not holding any asset as collateral can sometimes be a much higher interest rate than a mortgage. On top of this, there may be restrictions in the way the money can be spent. You may prefer the benefits of a cash out refinance or home equity loan over a series of student loans.
- Emergency expenses or large purchase of almost any kind: Sometimes unforeseen events will demand the use of a lump sum of cash for one reason or another. Untapped equity in your home may be a good way to access and leverage your assets in a way that enables you to reach your goals.
As you can see, there are many ways in which you can use the equity in your home to accomplish what you set out to do. Our speedy loan processing times mean you will have fast access to the cash you need as soon as possible. Speak with a loan professional today to see what options make the most sense for you.
FINANCIAL DISCLOSURES: MakeWay Mortgage Inc. is a mortgage broker who is not an agency of the federal government, nor affiliated with your current lender. This is not a commitment to make a loan. All approvals are subject to underwriting guidelines and eligibility. Underwriting guidelines include but are not limited to: debt to income ratio, loan to value ratio, acceptable credit and or income history, property type, current homeowner’s insurance, equity position, property type, number of units, financial reserves, bank statements, financial statements or tax returns, insurance, occupancy type, number of financed properties, Debt Service Coverage Ratio, rent history, taxes, etc. Call to secure your pricing today!