Should I Cash Out Refinance?
Should I Refinance?
Learn if it would benefit you to cash out refinance.
Determining if a cash out refinance is right for you
The very first step in determining if a cash out refinance is right for you is to know if you to have adequate equity in order to qualify. For the majority of homeowners, the maximum LTV (link to a page on “cash out refinance LTV”?) for a cash out refinance is 85% for an FHA loan and 80% for a conventional loan.
Assuming you are likely to have adequate equity in your home to qualify to pull cash out, you should then carefully evaluate the pros and cons of cash out refinancing, and determine if it is worth the increased loan amount. You may want to carefully evaluate if taking cash out of your home will serve worthwhile purposes that justify raising your loan amount on your mortgage. If you on are paying off debt, renovating your property, and/or refinancing into a lower rate, it may be of much financial benefit to cash out refinance. However, if you are taking cash out to spend on goods, travel, or other non-essential matters, you may want to carefully if having a higher loan amount and monthly payment is something you are prepared for.
Below are some of the most commons reasons people cash out refinance:
- Eliminating Debt – If you are pulling cash out of your home in order to consolidate debt you may find it to be a great financial decision. You may be able to eliminate a lot of interest payments if you are taking cash out to pay off credit cards and other high interest debt. Additionally, you will have the advantage of only having to make one monthly payment versus several different payments to different creditors.
- Home Remodeling – One of the most common reasons people take cash out is finance repairs, renovations, and additions to their home. A cash out refinance to remodel home can also be a great investment, assuming the types of renovations you make are known to increase the value of your home (to learn more about the types of renovations that increase equity “””visit this page”””).
- Lifestyle Enhancements – Home owners who have built up a lot of equity often will take cash out to travel, buy a car, invest, start a business, or use for retirement. You can take cash out of your home for any reason you want if you have sufficient equity and qualify.
To request a free consultation and prequalify to see how much equity you can pull out of your home, as well as the offered terms, contact us today!