With the economy starting to pick up and look brighter, many are using the opportunity to make some positive changes to their finances. One option is a Florida cash out refinance.
What is a Cash Out Refinance?
A cash out refinance is when you refinance your mortgage, using your home’s equity to obtain extra cash. A cash out refinance is based on your home’s value and the amount you may currently still owe on the mortgage. The money you get out of the refinance can be used for any purpose you see fit. Home owners often use the extra for the following, although it’s up to you how the money is spent.
• Paying off debts
• Education expenses
• Medical expenses
• Car purchase
How Much Cash Can I Get on a Cash Out Refinance?
The amount of cash you can get out of a cash out refinance depends on the amount you still owe on your mortgage and the value of your home. For instance, if you own a home with an appraisal value of $200,000 and you currently still owe $80,000 on the mortgage, this leaves you with $120,000 of equity in your home. Since banks don’t typically borrow more than 80 percent of the home’s value, you’ll be able to get about $96,000 in a cash out ($120,000 X .80 = $96,000).
Benefits of a Cash Out Refinance
Despite adding a larger balance on your current mortgage, a cash out refinance can help consumers in many ways. Here are some of the benefits to a cash out refinance.
• Interest you pay on a mortgage is tax deductible unlike interest on other loans and credit cards.
• It can help you lower monthly payments.
• By consolidating other debts, you’ll be able to make small monthly payments.
• Interest rates on mortgage loans are substantially lower than on credit cards and personal loans.
• It gives you the opportunity to get out of debt and have only one payment.
• You will have more time to pay back the mortgage loan.
When is a Good Time for a Refinance?
Knowing when the time is right to do a cash out refinance can be tricky, but with a little knowledge of interest rates you’re in a position to choose the perfect time. By researching interest rates, you’ll be able to obtain your refinance with the best possible interest rates.
If you’re in need of some extra cash or just want to restructure your current mortgage loan, call us and apply for a Florida cash out finance. The time has never been better!