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General Personal Finance Advice
Personal finance is an individual's financial status. It's about how much money you have, and how much you need. It is about managing your money - today and for tomorrow. Money is the currency on which all world economies function. Income - expenditure ...
Home Mortgages and Refinances
While seeking home mortgages and refinances it is important to shop wisely to get the best deal possible. While most organizations offer a similar array of products, it is the service that makes the difference. On time service, immediate response systems ...
The Question Is - To Refinance or Not?
What does it mean to refinance? Why would anyone want to consider it? There are numerous situations when someone would refinance. When we use the word refinance, we are basically referring to a loan: for example a car or house loan. It may also be a ...
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A cash out refinance mortgage loan is a great option if you have accrued a lot of equity in your home. If you owe $75,000 on a home that is worth $125,000, you could refinance the amount you owe and take up to $50,000 in a cash loan against the equity in your house. The money can be used to consolidate debts, do a remodeling project, or even invest. As great as a cash out refinance can be, there are a few things to think about before you decide to take out this type of loan.
How high are the fees to refinance?
Taking out a home equity loan usually costs less in fees than a refinance. Refinancing your home can cost you quite a bit when you consider higher loan fees and the possibility of points. If you already have a good interest rate on your loan, refinancing so that you can get a cash out option, might mean paying a higher interest rate on a new loan. In that situation, you might want to consider taking out a home equity loan instead of a cash out refinance mortgage loan.
How fast do you need the money?
When you take out a home equity loan, it takes less time to see your money. Often, it only takes 5 days to close. Cash out refinance mortgage loans can take a lot longer, so if you need the money immediately, it probably isn't the best option.
Protect yourself from scam artists.
There are lenders that practice something called loan flipping. They convince you to refinance your house, taking out a bit of equity for a project or two. A few months later they approach you to refinance again, convincing you to take out more cash from the equity in your house. Their scheme is to keep having you refinance, tacking on large fees and possibly increasing your interest rate until you are so far in debt that you end up losing your house. This particular scam has been played against many elderly homeowners with devastating results.
Taking cash against the equity in your house can be a wise move, but always compare taking a cash out refinance mortgage loan against the option of taking out a home equity loan and choose the plan that is best for you.
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