What’s a cash out refinance, and should you consider one? Basically, a cash out refinance means you are refinancing your home and pulling out equity (cash) from your home which gets added to your principal balance. At closing, you receive the “cash out”.
Ok, so why do people do that? Honestly, there’s a multitude of reasons people get a cash-out refinance.
Here’s a few of our favorites:
- Say you get a cash out refinance on your home and receive $50,000 at closing. You can use that to make some amazing renovations that you’ve been dreaming about – and it’s ultimately a good investment, because the renovations may add even more value to your home.
- College debt. People often use a cash-out refinance to pay off their college debt, or send their child to college. This all depends on the interest rates on your loans, but can be incredibly worth it!
- Credit card debt. Sometimes you go through a hard time, and credit card debt can be some of the most expensive debt. People will take a cash out refinance to pay off their credit cards because the interest rate on their refinance is far better than their credit card.
A cash out refinance could be a great option for you! Always keep in mind that a cash out refinance works the same as any refinance – there will be closing costs, and depending on how much you borrow, PMI may still apply. However, if you can get a good interest rate on your loan, a cash-out refinance can be an excellent tool to invest in your home and family. We’d love to answer any questions you have! We’re a Christian Mortgage Lender with a small family team that values faith and family, so you know you’ll get advice that fits you. Looking forward to your call!
Best,
Audrey
The Christian Mortgage Mom
