Need cash? The equity in your home may help.
With low interest rates and an increase in property values, it may be a good time to get a cash out refinance. A cash out refinance loan is similar to a refinance, but with a cash out, you take out a new loan for more than the amount owed and receive the difference in cash at closing. Here are five reasons you may want to think about applying for a cash out refinance.
- To access cash. The main reason people apply for a cash out refinance is to access the equity in their home. The loan proceeds you receive can be used to make home improvements, pay off high interest debt, medical bills, or pay for college. If you use it to make home improvements, it could result in raising your home's value.
- Pay off higher interest debt. Credit card debt typically has a higher interest rate than a home loan. If you pay off your debt with loan proceeds you receive, you could potentially save thousands of dollars in credit card interest.
- To get a lower rate. With a cash out refinance you could lock in a lower interest rate on your home. Currently, interest rates are low, so you may save money if you lock in early before those rates go up.
- To get a tax deduction. Mortgage interest may be tax deductible. You should consult a tax advisor for further information about the deductibility of interest and other charges.
- To get a fixed rate. A cash out refinance is a fixed interest rate for either 15 or 30 years. Other options like a home equity line of credit have variable rates.
While home values continue to be strong, now may be a good time to take out cash from your home and help ease some of your expenses. Contact Freedom Mortgage to speak with a loan specialist and see if a cash out refinance is right for you.