When life happens, sometimes you need some extra cash. Ever consider looking to your home for the answer? If you home is worth more than what you have left to repay on your mortgage, you may be able to use a cash-out refinance1 to increase your cash flow.
What is a cash-out refinance?
A cash-out refinance is a loan option for a homeowner whose built equity in their home. With a cash-out refinance, they can replace their old mortgage with a new one and get the difference (a.k.a. their equity) as cash to use however they want.
Why get a cash-out refinance?
Roofs get damaged, tuition comes due, unexpected medical conditions emerge. Whatever the reason is, having some extra cash flow would give you more financial flexibility and more room to breathe.
With a cash-out refinance, you’ll have the cash flow you need by tapping into your home’s equity for a lump sum payment. That’s money you can access quickly.
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How can I use a cash-out refinance?
Optimizing your cash flow is unique to every situation. With a cash-out refinance, you can receive a portion of your home’s equity as a lump sum of cash you can use however you see fit. Common uses include:
- Paying for education costs
- Financing unexpected expenses
- Consolidating high-interest debt
- Funding home improvements/repairs
Cash-out refinance vs. home equity loan
When it comes to accessing your home’s equity, a cash-out refinance and home equity loan2 can both get the job done. However, while these loan programs may serve a similar purpose, they are quite different from one another. Let’s compare cash-out refinance vs. home equity loan.
Cash-out refinance
A cash-out refinance is a new first mortgage, unlike a home equity loan. The amount you receive from your cash-out refinance is based on the home’s value and you can secure a new initial interest rate.
Home equity loan
A home equity loan is a second loan separate from your original mortgage. Securing a home equity loan is based on your home’s equity and it will maintain the interest rate from your initial mortgage.
Unsure if a cash-out refinance is right for you? Having the right lender by your side can make the whole process simple. Contact one of our home loan experts today for answers to your cash-out refinance questions.
1All loans subject to credit approval and meeting eligibility requirements. Restrictions apply. Must meet minimum equity requirements. By refinancing an existing loan, the payments and total finance changes may be higher over the life of the loan.
2All credit decisions for brokered products will be made by a third party. Restrictions and limitations apply.
