Cash-Out Refinance

6 Benefits from a Cash-Out Refi

Young Couple Rennovating Property Together

Young Couple Rennovating Property TogetherIf you’re a homeowner with considerable equity in your home, you might want to consider a cash-out refinancing plan to finance home projects or eliminate high interest debt. In a nutshell, this arrangement allows you to initiate a new mortgage with a larger principle than your existing one – then, you obtain cash on the balance between the two amounts. Used responsibly, there are several advantages to a cash-out mortgage, including these top six benefits.

  1. You may be able to obtain a better interest rate. As compared to other types of property-based loans, a cash-out refinancing usually offers lower interest rates. Home equity, home improvement and business startup loans are typically a few fractions of a percentage higher. A lower interest rate means reduced monthly mortgage payments.
  2. You can improve your on-hand cash flow. You can apply funds from cash-out refinancing to balances due on high-interest debts or credit cards accounts. Eliminating these debts puts you in a better cash liquidity position for unexpected costs or emergencies. You’ll still carry the debt through the refinancing, but you’ll only be making one payment per month on a loan carrying a much lower interest rate.
  3. You’ll get the opportunity to improve your credit score. When you pay off or pay down balances on revolving debt or credit cards, you improve your credit rating. Credit cards that you’ve maxed out have a severe negative impact on your score, as are those where you’re only paying against interest instead of the balance.
  4. There are tax advantages of cash-out refinancing. You’ll take advantage of a couple of tax benefits with a cash-out refinancing. First, the interest you pay is tax deductible; the interest you pay on other types of debt or credit cards is not. Second, some of the closing costs you’ll incur through the refinancing process are also not subject to tax liability.
  5. Fees for refinancing can be minimal under certain circumstances. There are costs related to refinancing your mortgage, including application fees, getting your credit rating, document review expenses, and title insurance and search. However, if you have high equity in your home and a great credit rating, these costs may be reduced. In addition, if you stick with the same lender that issued your original mortgage, some of these fees may not be necessary the second time around.
  6. Cash-out refinancing can help you boost your home’s fair market value. Many homeowners use the proceeds from their cash-out refinancing to fund home improvement projects. These renovations almost always cause the fair market value of the property to increase, whether the projects are interior, exterior or add-ons to the existing square footage.

While homeowners must use caution when arranging a cash-out refinancing plan, the advantages can be significant under appropriate circumstances. If you’d like to know more about whether a cash-out refinance is right for you and qualification requirements, consult with a refinancing professional for details.

*Disclaimer: Paramount Equity Mortgage is not a tax advising company. If you have any questions, please reach out to your CPA for tax advice or other tax related questions.

 

Read More »

6 Benefits from a Cash-Out Refi

6 Benefits os a Cash out refi

6 Benefits os a Cash out refiIf you’re a homeowner with considerable equity in your home, you might want to consider a cash-out refinancing plan to finance home projects or eliminate high interest debt. In a nutshell, this arrangement allows you to initiate a new mortgage with a larger principle than your existing one – then, you obtain cash on the balance between the two amounts. Used responsibly, there are several advantages to a cash-out mortgage, including these top six benefits. 

You may be able to obtain a better interest rate. As compared to other types of property-based loans, a cash-out refinancing usually offers lower interest rates. Home equity, home improvement and business startup loans are typically a few fractions of a percentage higher. A lower interest rate means reduced monthly mortgage payments. (more…)

Read More »

Cash Out Refi – What is It Exactly?

cash out refinance paramount equity

While there are many different reasons to refinance your existing mortgage, many homeowners do so with the intention of getting access to cash. A cash out refi is a process that involves getting cash out of the equity in your home by refinancing your primary mortgage.

What is a Cash Out Refi?

The basic idea behind this type of refinance is simple. In order for a cash out refi to work, you must owe less than what your house is worth. You take out a new mortgage
for the full value of your house and then use some of the money to pay off your existing mortgage. The money that is left over after paying off your first mortgage is yours to keep. At that point, you’re left with a mortgage for the entire value of your house and you have some cash to use as you please. (more…)

Read More »
Copyright © 2003-2017 Paramount Equity® Blog. All rights reserved.
"Paramount Equity®", "Paramount Equity Mortgage®" and "Savings Made Simple" are trademarks of Paramount Equity Mortgage®, LLC.
   

Paramount Equity Mortgage®, LLC is licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, License #4170047; Arizona Mortgage Banker License #0922160, NMLS# 30336; regulated by the Colorado Division of Real Estate NMLS# 30336; Connecticut - Connecticut Mortgage Lender License # ML-30336; D.C. - Mortgage Lender License #MLB30336; Florida Mortgage Lender Servicer License # MLD 898; Kansas - Kansas licensed mortgage company License # MC.0025206; Maryland - Mortgage Lender License # 21172; Nevada Mortgage Banker License #3919; Licensed by the N.J department of Banking and Insurance NMLS#30336; Oregon Mortgage Lender License #ML-3256; Texas – Paramount Equity Mortgage®, LLC NMLS #30336; Utah DRE Mortgage Entity License #6967176; Washington Consumer Loan Company License #CL-30336; and Wisconsin – Wisconsin Mortgage Banker License #30336BA; NMLS ID #30336.