Cash-Out Refinancing

Share post:

Cash-out refinancing is a method of refinancing for more than the amount owed on the original mortgage. In other words, A cash out refinance is refinancing the existing mortgage and borrowing some of the equity in a lump sum to use for other purposes. Such as home improvement, college tuition, family vacation, etc.

The amount difference between the new and the existing mortgage is considered a home equity loan. Generally, Cash-out refinancing differs from a home equity loan in two ways.
First, a home equity loan is a separate loan on top of customer’s first mortgage whereas a cash-out refinance is a replacement of first mortgage.
Second, the interest rate on a cash-out refinancing is usually lower than the interest rate on a home equity loan.

Cash-out refinancing has become popular with homeowners because it produces quick cash and usually leaves their monthly mortgage payments unchanged, but it can also create a greater burden of repayment down the road.

Cash-out refinancing can be a good idea for homeowners who want to draw on the equity built up in their house to get cash for a major purchase or for their children’s education. However cash out refinancing is more advantageous when the item that was purchased has a similar expected life as the loan.

Cash out refinancing is not wise to do if customer is going to receive a higher interest rate than what already have on his current mortgage.

Austin K
Austin Khttps://www.megri.com/
My Name is Austin K. I work as Digital Marketing Professional at Megrisoft Limited London Office. I am blogger and write on topic of News, Technology and Travel. I love Starbucks.

Related articles

The Fundamentals of Horse Jumping

When looking for a horse jumping course, you'll want to be sure that it offers a good selection...

3 Reasons Why You Need Residential Moving Services

There are several reasons you should hire a residential moving service to help you with your move. It...

Is It Time for You To Switch From VHS to DVD?

Many people are hanging onto their memories in VHS form. While there is nothing inherently wrong with that,...

5 Useful Tips For Owners Of Online Fashion Businesses

Even while it can take a lot of time and effort to get rid of old or new...