Cash Out Refinance – 5 Key Things To Consider
If you haven’t heard interest rates are at record lows (I know you probably heard this on the radio the last ten years, but this time its true!). So if you have a mortgage, there’s a good chance you can refinance into a lower rate (generally a good idea 🙂 and may consider getting cash out, so here are five things to consider. First we will start with the pros….
Low Rates and Lower Rates.
As we said rates are low now – like really low. And if you’re considering a HELOC or home equity line of credit, rates on a mortgage refi are often lower. So you can lock in a low rate and have lower payments – sounds good right?
Debt Consolidation
If you have a lot of high interest debt (i.e. credit cards), you can pay that off and potentially save thousands in interest payments!
Cash On Hand
We are definitely in uncertain times and you might want a cash cushion to help pay bills and also if you’re income in the near future is uncertain. Or you can use that for home improvements like maybe a new home office or gym (this can often be used as a deduction as well).
And Some Cons
Don’t Rinse and Repeat
Ok we are trying to say don’t get the cash out and repeat the same debt spiral. If you’re cashing out and taking advantage of today’s great rates make sure you take advantage of the opportunity and avoid the temptation to go on an amazon shopping spree and run up the bills again.
Closing Costs and PMI
Make sure to check your closing costs aren’t more than the new savings! Also if you currently aren’t paying PMI and refi to more than 80% of the home value you may have to start paying PMI!
In general if you’ve been considering a cash-out refinance or just want to see if you can lower your monthly payments – contact us today and we’ll give you a run-down of your options and see what best fits your needs!
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