In the last year the number of people refinancing their homes has skyrocketed due to records lows of the national interest rate, but do people know about a cash-out refinance? You might be asking yourself what is a cash-out refinance? How do I qualify? Well, here is our Better Lending breakdown.
In laymen’s terms, the definition of a cash-out refinance is when you take out a new home loan for more money than you own on your current loan, for example, say your home is worth 500,000 and you still owe 400,000 you would have 100,000 in equity. Depending on your situation the cash-out refinance loan would allow you to take up to 80% of the value of the home. The reason many people decide to do this is to be able to pay off other existing debts with a better interest rate than say a credit card or a car loan. You can also use the money towards home improvements, many people will use the equity and make renovations to their home which would improve the value of the home even more! If this sparked your interest, make sure you read our blog about refinancing your home.
The difference between a Rate-and-term refinance is you are exchanging the current loan for one with better terms, for example, the interest rate. With interest rates being at historical lows and home values being at a historic high it might be the perfect time to think about doing a cash-out refinance. Here at Better Lending, we can help you with all of your mortgage needs! Tune in next week Wednesday to learn about what goes into appraising your home!
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