What is a Cash-Out Refinance?
Orlando Cash Out Refinance | Florida No Credit Home Mortgage
Many people have refinanced their homes to reduce the monthly payment or perhaps increase the monthly payment but reduce the mortgage length for a faster payoff. These are effective ways for homeowners to adjust their budgets or reduce the interest payments over the life of a mortgage. There is another option called a cash-out refinance. Let’s take a look at it.
A cash-out refinance is a way for a homeowner to tap into the accumulated equity in their home. They may wish to do a home remodel, pay off higher interest rate bills or credit cards, or just about any other reason where a cash infusion is needed. If they have a good bit of equity, and can benefit from a lower interest rate, a cash-out may be a viable option.
What the homeowner does is refinance at current mortgage rates. When the transaction is done, they receive an agreed amount of cash. Keep in mind that they now have a higher mortgage amount, because they had their previous mortgage balance plus the amount of cash they received. Another option is to take a second mortgage to receive the cash from their home equity, but there may be reasons not to do this.
- Second mortgages may have a higher interest rate, because the Investor knows they are second in line if the homeowner defaults later on their loans
- It may be inconvenient to deal with two mortgages
- The homeowner may benefit from lower interest rates by refinancing their principal mortgage and adding in the cash they need
A cash-out refinance may be a good choice for homeowners who have adjustable-rate mortgages and need to refinance to a lower interest rate fixed mortgage. Getting the cash they need now is a lot simpler if they plan to refinance and eliminate that adjustable-rate mortgage.
AHL Hard Money Loans can help you obtain the cash you need from the equity in your home. We can help you if you have equity but can’t get endorsed by conventional Investors, or need the money more quickly and don’t want to wait weeks for a bank validation. Call us today to discuss working with our investors to get you cash quickly and efficiently.