Is a “Cash Out” Refinance Right for You?
There are a number of different refinancing options available to homeowners. Some popular ones are: 15 and 30 year mortgage refinances, cash-in refinancing, short refinancing, and lastly, cash out refinancing. Cash Out Refinancing is a great way to access money you have tied up in your mortgage as equity.
One of the biggest advantages to owning your own home is creating “equity,” In short, equity is the dollar amount that you own of a house. As you pay your mortgage each month (and as your home appreciates in value), you increase the equity you’ve gained. Cash out financing can help you tap into that equity in order to reallocate money elsewhere. It’s important to know that, in Texas, you can’t take out ALL the equity you’ve built up. You must leave 20% equity in your mortgage.
Topping the list of uses of cash out refinancing is home improvement. Whether it’s redoing the kitchen or a bathroom, or finishing a basement, money from cash out refinancing can help you invest back into your home. As a result, your home’s value can go up and ideally you stand to make more when you sell. If you’re feeling investment savvy, the extra savings could also be put towards acquiring a rental property. A local lender, ideally one with whom you’ve already got a relationship can help you with presenting cash out refinancing options!