A Guide to Cash-Out Refinancing
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Transcript of A Guide to Cash-Out Refinancing
Important Items When it comes to a Cash-Out Refinance, there are a few things you’ll need to know. Refinance: A normal refinance involves renegotiating your existing loan to include a better interest rate. There are a handful of varieties of refinance options, but cash-out refinances act more like an entirely new loan. Home Equity: Cash-out refinancing only works if you have equity in your home, so it’s important to be fully aware of the status of your loan. Equity is the portion of the home that you actually own. Closing Costs: Since this is a new loan, be prepared for closing costs just like your initial mortgage. These can be hundreds or thousands of dollars. Your Financial Goals: Before you consider a cash-out refinance, you should have firm financial goals in place.
http://www.newamericanfunding.com/refinance.aspx
How It Works As the name implies a Cash-Out mortgage offers you the chance to turn your home equity into cash and pocket the difference. Here’s how it works:
Existing mortgage: Initial Loan – Value Paid (Equity) = Remaining Principal
New Cash-out Loan: Remaining Principal + Desired Cash
So, if you still owe $100,000 on a $300,000 home, and need $50,000 to help pay for college tuition, you refinance for $150,000 at a new interest rate and pocket $50,000.
Will It Work For You? Cash-Out Refinancing can be used to help in many situations, but it’s important to be careful. Before you take out a new loan to finance some of the most common uses below, be sure that you will be able to handle your new loan. • Consolidating high interest debt • Increase your mortgage interest tax deduction • Finance home improvement loan projects • Fund a business • Pay for college tuition • Eliminate medical bills
http://www.newamericanfunding.com/home-improvement-loans.aspx
Cash-Out or Home Equity Loan Cash-Out • Replacement for initial mortgage • Provides more safety in the event
of a foreclosure • Provides lump sum to be uses as
you wish • Closing Costs required to secure
your loan, similar to your initial mortgage
VS.
Home Equity Loans • A separate loan or line of credit
in addition to your mortgage • Competitive rates, especially if
lower-rate refinance is not available
• Variable interest rates on lines of credit
• Only take the money you need • No closing costs
http://www.newamericanfunding.com/cash-out.aspx
A Guide to Cash-Out Refinancing
Learn More at
www.NewAmericanFunding.com