August 26

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The journey of 10,000 miles starts with one step.

What will be your step? A cash out refinance can be a quick and simple process, as the process should be very familiar from when you initially purchased your home. The process is typically streamlined because there is no seller involved and you will be the only person required to do any signing. Just like when you purchased your home, there will also be fees and charges associated with the loan, so you do want to ensure that the amount of equity you have covers the costs associated with the loan along with the amount you are wanting to receive at closing.

Home Improvements and Repairs

If you are looking to refinance your home to use your equity to make home improvements or repairs, there are several things that you will want to consider. When going this route, you will be able to deduct the interest that you pay on your new loan in most cases. As of December 2017 the only way you can deduct the interest on your taxes is if you buy, build, or substantially improve your home. This will include things like renovating/remodeling your kitchen or bathrooms, building an outdoor kitchen, or building an addition to your home. This does not include general repairs or minor upgrades to your home like interior painting, replacing a furnace or air conditioner, or repairing a broken window.

Debt Consolidation

There are varied opinions about using the equity in your home to consolidate credit cards and other types of debt. The main reason to do something like this is to reduce the amount of total payments you are making in order to save money on a monthly basis. The other goal of doing this is to have all of your debt with a lower interest rate as credit cards generally have a much higher rate than a home loan. However, this may not always be the best option to save money in the long term. When you refinance your home you will normally restart the term of your loan, and when doing a cash-out refinance, you are taking out a larger loan amount than you previously had. This results in you paying more interest over the life of the loan when you could have paid off the credit card or other debt in a shorter time frame and saved that way. There is also concern from many financial professionals about adding unsecured debt, such as credit cards, into a secured loan, such as your mortgage. This means that you are putting your house on the line for this debt if for some unforeseen circumstance results in you not being able to make the new, larger payments.

Other Reasons for a Cash-Out Refinance

There are numerous other reasons an individual would take a cash-out refinance on their home. Many people utilize the equity in the home to invest into other opportunities. Whether it be investing into rental properties, the stock market, or crypto currencies, you should always be aware of the risks associated with whatever it is you are investing in. Using these funds to pay for education, either for yourself or your dependents, can be great if there is no other way to pay for such a large expense. There are also people who may do a cash-out refinance in order to pay for a large family vacation. It may be the extravagant trip you have always dreamed of or the long overdue honeymoon that had to be put off due to life circumstances.

What you need to keep for all this

Take charge and seize this lifetime opportunity to plan for your future. There is no better market conditions than now to refinance your home and make your home work for you.

Call me now to start the process.


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