If you are a homeowner thinking about a significant home renovation in 2018, you have probably already considered your budget. As with any large project, you need to have the ability to pay the expected costs plus have a little bit extra set aside, just in case. The great news is that if you are a homeowner with a mortgage, you may qualify for cash-out refinancing, which can be a helpful way to leverage some of your home equity to cover renovation costs.

In today’s blog post we’ll explore the topic of cash-out refinancing and how this unique financial product can help to solve your budget woes.

What is Cash-Out Refinancing?

If you have never heard of it before, you are probably wondering exactly how cash-out refinancing works. In short, you refinance your existing mortgage into a new one while keeping the difference in cash. For example, if you have $100,000 left on your mortgage, but your home is worth $200,000, you might decide to refinance to $150,000. You will then be left with $50,000 in cash, which you can pull out to cover the cost of renovations or for other purposes.

Note that this is different from other forms of mortgage refinancing, which may or may not increase your total balance.

Some Of The Major Pros Of Cash-Out Refinancing

As you might imagine, there are significant pros to cash-out refinancing. If you decide to use the funds for renovation purposes, you are essentially using your mortgage to increase the value of your home. That is, of course, assuming you complete renovations which boost your home’s value!

Cash-out refinancing can also provide better or more stable interest rates than a loan or a home equity line of credit. This depends on a variety of circumstances, so be sure to check with your lender.

A Few Other Considerations To Keep In Mind

As with any financial product, there are some considerations to keep in mind. You may be extending the length of your mortgage, or refinancing to a different interest rate. You also can’t just walk in and sign for cash-out refinancing. There will be a process similar to the one that you went through when you got your current mortgage.

As you can see, cash-out refinancing is an excellent option for homeowners looking to use some of their home equity to finance other expenses. To learn more about this type of refinancing or to explore other mortgage options, contact us today. 

Are you interested in paying less per month on your mortgage? Or perhaps you would prefer if your mortgage was paid off a couple of months – or years – faster? If you are a homeowner with a mortgage, one option that is open to you is refinancing. In today’s post, we will explore the topic of mortgage refinancing and how to know if it is a good idea.

How Does Refinancing Work?

In short, refinancing is a process in which pay off your existing mortgage and borrow a new mortgage under a different set of terms. In most cases, homeowners will use the funds from the new mortgage to pay off the old one. Depending on the terms of your new mortgage, there may or may not be cash left over which you can use to invest, pay down debts, make renovations or for other purposes.

Refinancing To A Lower Interest Rate

Mortgage interest rates tend to fluctuate over time and because of this, refinancing to a mortgage with a lower rate is quite popular. If you initially borrowed your mortgage when interest rates were at 5%, you may be able to lock-in a new mortgage at a lower rate. Note that it can be tough to try to “time” the mortgage market, so check in with your mortgage professional to find out if the time is right.

Refinancing For Lower Monthly Payments

Another great use of refinancing is to reduce the monthly payment required on the mortgage. If you have ten years remaining on a 20-year mortgage, refinancing to extend the payments out to 15 years will lower the monthly payment.

Refinancing To Eliminate Other Debts

Finally, many homeowners will refinance their mortgage to use some of the home’s equity to pay off other debts. For example, a family might have $25,000 in debts that are being charged a higher interest rate than their mortgage. If they have built up enough equity, they can refinance and draw out $25,000 from the home’s value. This shifts the debt from the higher interest areas into the mortgage, where it can be paid off over time.

As you can see, there are many reasons why you might want to refinance your mortgage. To learn more about the refinancing process, or to discuss your options, contact us today. Our professional team of mortgage advisors is ready to help you choose the path that best suits your financial needs.