Now is a great time to refinance as interest rates remain at all-time lows, and many homeowners are sitting on untapped home equity. A cash-out refinance is one of two types of refinancing, in which a new loan is taken out on the property that is greater than the original mortgage. The difference between the value of the new and original mortgage is available to the borrower as cash. Right now, having more cash-on hand may help ease some financial stress or worries for many homeowners.
Here are a few ways in which you can utilize the money from the refinance to help pay for some more significant expenses!
Consolidate High-Interest Debt
This is a good option for those with high-interest debt, such as credit card bills. You can put the cash towards the high-interest bearing balance and then consolidate the remaining debt into one lower-interest loan. Paying off loans with high-interest and substantial balances may help you save money in the long-run. Additionally, the faster you pay off debt, the more money you will have for savings in the future.
Pay off Student Loan Debt
Although federal student loans are not accruing interest and can be put on hold right now, you can use the cash to pay down your student loan balance to help you work towards a debt-free life faster.
Put More Money into Retirement for Long-Term Savings
This is a good option for those who want to focus on long-term savings. Maybe you haven’t been able to save as much recently because of unexpected expenses but want to boost your retirement account and focus on long-term savings. Remember, it’s never too early to start saving!
Invest in More Real Estate
For savvy buyers, now may be a great time to expand upon your investment portfolio. We are in a buyer’s market and mortgage rates remain at all-time lows. Use the funds from the cash-out refinance to invest in a second home for your family or an investment property to generate additional revenue.
Pay for Home Improvements & Repairs
You may be able to use the cash to pay for home renovations and repairs you’ve always wanted to accomplish. This may be an excellent option for those who are looking to sell their home soon, as home improvements can increase the valueof the house.
Get in touch with our mortgage specialists to determine if you can benefit from a cash-out refinance today!