With interest rates at an all time low, more people are considering refinancing their homes. Mortgage refinancing can be confusing and can cost you more money than you think.  Cash Out Mortgage Refinance With lower interest rates, some consumers are looking to lower their mortgage payments.  Others need or want extra money from the equity in their home.  These are the consumers that need to check all of their options and weigh the consequences of them.  If you are in need of extra money, you have a couple of options.

  • A home equity loan is a separate loan on your mortgage.  Some call this a 2nd mortgage. These loans normally have higher interest rates and a shorter payback schedule but you generally do not need to pay closing costs which can add up. Also, how much longer to you have on your current mortgage?  If it is under 10 years, you should consider the home equity loan.  Then you are not extending your loan period for another 20 years.
  • A cash out mortgage refinance is using your current mortgage and adding more money to the balance of the loan.  You cannot use this option if your mortgage was taken out in the last 12 months.  An example of a “cash out” mortgage is, if you owe $ 75,000 on your current mortgage and need an additional $25,000 that would be a total loan of $100,000. Some things to consider are the new cash out refinance interest rate compared to your old interest rate.  What will your payments be on your new loan?  How much will your closing costs be?  Make sure what you are using the additional money for is worth paying for it over 20 to 30 years. What is your equity in your home?  Equity is how much your home is appraised at minus your balance on your mortgage. The banks like to loan about 75 to 80 % of your home’s appraised value.

So you need to thoroughly review all of your financing options as well as your current mortgage situation.  Think about what how the additional money will be used.  Will you pay off credit cards with high interest rates? Do you have a home improvement project which would increase the value of your home? Gather all your information and then talk with a professional lender. The lenders at LoanexFastCash.com would be happy to show you your options.  This decision does not need to be taken lightly.  Examine all your options before you commit.