By Jami J. Rodgers
Refinancing Can Mean Money in Your Pocket
While refinancing can seem like a daunting task, going through the song and dance can equate to cash at the end of it all.
When considering your options, a cash out loan during refinancing means requesting a loan above the value of the current property.
You can use this windfall to pay off big-ticket items like educational expenses, medical bills, or credit card debt.
Cash Out Refinancing Considerations
Cash out refinancing is different from a home equity loan, and you should consider the differences when choosing a refinancing option. A home equity loan is a second loan on in addition to your first mortgage. Cash out refinancing replaces your first mortgage.
Typically, interest rates for cash out refinancing are sometimes lower than interest rates available with a home equity loan.
Lastly, when you refinance your loan with a cash out option, you have to pay closing costs. It is important to look at the big picture when you consider your refinancing options.
Leverage the Equity in Your Home
When you refinance, use your home's equity to get the cash you need without a second mortgage. Typically with cash out refinancing, you can receive a lump sum payment, and without having a second loan. This can be less of an administrative burden on you, and provides you with liquidity and the cash you need for large expenses.
Source: U.S. Federal Reserve Board
About the Author: Jami J. Rodgers works in acquisition management for the federal sector in Washington, D.C. Jami holds a B.S. in Spanish with a business option and an international studies minor from The Pennsylvania State University.