Whether you want to make improvements to your home or are just looking for fast cash, it may be worth your while to consider refinancing your home and cashing out on the equity. With cash-out refinance, you could take advantage of thousands of dollars in equity without opening a new line of credit.
Refinancing is the process of replacing your existing mortgage with a new one. There are several refinancing options out there. However, a cash-out refinance is the only one that replaces your mortgage AND provides you with a lump sum of cash after closing.
Calculating cash-out refinance rates and cash potential depends on a few factors. First, the total amount of money you can get with a cash-out refi depends on the value of your home.
In most cases, a home’s value naturally increases over time due to changes in cost of living, population sizes and demographics. This is why buying a home is considered a good investment.
However, this is not always the case. Some factors could cause the home’s value to decrease. For example, natural disasters, sluggish economies or a decrease in the demand for homes could all cause a home’s value to depreciate.
When you are sorting through cash-out refinance rates and considering getting started, it is important to keep these factors in mind. If your home is located in an area experiencing economic turmoil, you could end up owing more than what the home is worth. In this case, a cash-out refi would not make financial sense.
To get the true value of your home before obtaining a cash-out refinance, you must have the home and property appraised. An appraisal is an assessment of the home to arrive at a fair market value.
Typically, the maximum amount you can cash out with a refinance is 80% of the home’s value. However, the specific percentage can differ between lenders.
There is one exception to this rule. A VA cash-out refinance allows borrowers to cash out the full amount of the home’s value. However, these loans are offered by the Department of Veterans Affairs (VA) and are only available to those who are eligible for VA benefits. Veterans and military members must meet the military service requirements in order to refinance with the VA.
Wondering how to get a cash-out refi and initiate the refinance process? Continue to the next slide to learn how cash-out refinance works and how you can get started today.