What Is Cash-Out Refinancing?
Turn a portion of your home’s equity into cash.
Cash-out refinancing lets you turn a portion of your home’s equity into money you can use however you want. It can be a solution to finally paying off credit cards, consolidating debt, affording college or remodeling your home.
How does it work?
Equity is the difference between your home’s value and how much you owe on your loan.
| If your home’s value is | $300,000 |
| And you still owe | $200,000 |
| Your equity equals | $100,000 |
With cash-out refinancing you can receive a portion of the $100,000 in cash. For example, if you choose to take $25,000 of this equity in cash, your refinanced mortgage will look like this:
| Equity you turned into cash: | $25,000 |
| Plus what you still owe: | $200,000 |
| Your new mortgage: | $225,000 |
It’s important to remember your new loan will be greater than your current loan. However, even with cash-out refinancing, it’s not uncommon for borrowers to receive a lower interest rate, or a shorter term, both of which offer opportunities for new savings over your current loan.
You can use the money however you like.
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The cash-out option is a great way to cover the costs of expected or unexpected life events, and any other personal or financial needs you might have.
- Pay down or pay off high-interest credit card debt
- Consolidate multiple home loans into a single payment at a lower rate
- Pay off auto loans or other debt
- Cover college or other education expenses
- Remodel or renovate a home
- Take care of health related expenses
- Make real estate or other investments
- Accommodate a growing family, divorce or other life events
- Even take a dream vacation
There are a lot of ways cash-out refinancing can help. To learn more talk to a PrimeLending Home Loan Expert. Or call 800-317-7463.