Is A Cash-Out Refinance Right For You? Five Questions to Ask Yourself
Whether you want to make improvements to your house, have dreams of travel or pursuing a hobby, or you are facing a personal crisis, extra money could almost always come in handy. If you are a homeowner with equity in your home, you may have access to cash that you didn’t even realize you did. There are several different methods of obtaining this money and only you (and your financial advisor or mortgage broker) will know which is right for you. One option that is extremely popular today is the cash-out refinance.
A cash-out refinance, according to Investopedia, is an alternative to a home equity loan that involves obtaining a new mortgage where the amount is greater than the existing—allowing you to extract additional value in a cash lump sum.
How Do You Know if A Cash-Out Refinance Is Right for You?
Here are five questions you can ask yourself, or work through with your lender, to figure out if this is the right option to help you meet your financial needs.
- Do You Have Equity?– You will need to have equity in your home for a cash-out refinance. Have you been paying on your home for awhile, or has it raised in value? If so, you should have equity available to you.
- What Is Your Current Interest Rate?– What are you currently paying in terms of interest rate? It is important to know this to know if it will be smart to refinance?
- What Rate Could You Refinance At?– It only makes sense to refinance your home if you can refinance at a lower (or, at least, the same) interest rate. It may be time to shop around for the best rates in or around Louisville, KY.
- Are Your Plans for the Cash Solid? – Getting cash sounds like a great idea, but this is money you will eventually have to pay back. Make sure you are planning to use the money to make improvements to prevent you from utilizing other higher-interest forms of credit.
- Do You Have Help with the Process?– Working with refinancing is not something you should do alone. A cash-out refinance is only right for you, if you have assistance with the process. Consider working with the experts at Liberty Financial. The professionals at Liberty Financial can make sure you find the right solution for all your refinance needs.