Cash out Refinance- The Big Picture
If your home’s equity has been building over time, a cash-out refinance allows you to turn a portion of that equity into cash — cash that can be used however you like. The most popular reasons to utilize a cash-out refi are to renovate your home, consolidate debt, settle unexpected medical expenses, or make real estate or other investments.
Rate savings over time- You would have a new mortgage at a higher amount, but lower interest rates and shorter terms could still offer significant savings over time. Many lines of credit have an adjustable rate attached to them, or a very high rate and payment obligation while a cash-out refinance does not in comparison.
Tax Deductions - mortgage interest is often tax deductible. Plus, there are some costs associated with closing fees that are also tax deductible. You could even benefit if you pay off some tax deductible debt with the cash you would receive from a cash-out refinance.
Only you can decide when a cash-out refinance is the right option. It can be a smart financial decision and a great way to pay off debt or pay for home renovations. With rates on the rise it may be something you want to consider sooner than later. I’d be happy to review your particular situation and discuss your options at no obligation anytime.