Upgrade Your Home with a Cash-Out Refinance
Do you need money to pay for your dream renovation? With a cash-out refinance, you can have money to remodel while refinancing your current mortgage all in one transaction. Here’s how to use a cash-out refinance instead of a home improvement loan.
How does a cash-out refinance work?
A cash-out refinance allows you to use some of the money tied up in your home’s equity by borrowing more than you owe. It is all based on how much your home is worth, your current mortgage balance, and how much you are looking to borrow.
Say you own a home that is worth $300,000 and still owe $150,000. Now let’s say that you need some extra cash, maybe about $30,000. You could then do a cash-out refinance to get your money. Your new loan would be $180,000 (the $150,000 you still owe on your home and the $30,000 you’re going to take out in cash).
Basically, you’re taking out a larger loan that will consist of the original balance prior to the refinance plus the desired cash-out amount. If you are able to get a lower interest rate while extracting cash from your home with cash-out refinancing, then you’ve hit the jackpot! You’re saving money and you’ve got money in the bank.
What are the benefits?
- Obtain a large sum of money at once,
- Possibly receive a lower mortgage rate that reduces the overall cost of the loan
- All interest you pay is potentially tax-deductible
- Home improvements can increase your home’s value
The best use of cash-out refinancing is for home improvements that increase the value of your home. You can pay off your existing mortgage with a lower rate and have your renovation paid for. Contact Consumers Credit Union to get started with your refinance today!