Are you interested in a cash-out refinance? There are many benefits, including the ability to use the equity in your home for everything from a home improvement project to debt consolidation.
If you’re on the fence regarding a cash-out refinance, now’s the time to learn more about the benefits. The information you collect will help you decide if it’s right for you. Here are five benefits that could move you in this direction.
1. A cheap way to borrow money
When compared to other types of loans — such as a personal loan — you may find that a cash-out refinance is associated with a more competitive interest rate. This is due in large part to the fact that it’s secured by your home. If you’re going to borrow money, you might as well do so at the lowest possible rate.
2. Mortgage interest may be tax deductible
Any chance you have to improve your tax situation is one that you should take advantage of. Mortgage interest may be tax deductible, which works in your favor come tax time. Discuss this with your tax professional before you use it to make a borrowing decision.
3. You can use the cash however you want
Many people use a cash-out refinance to improve their home, but this isn’t your only option. Other ideas include debt consolidation, paying for a major expense (such as a wedding), or traveling the world.
4. Use the cash to boost your home’s value
If you plan on using the funds from a cash-out refinance to renovate your home, you’re boosting its value at the same time. In other words, you’re taking out equity in your home but putting it right back into the property.
5. No shortage of lenders
You don’t have to apply for a cash-out refinance with the same company that currently holds your mortgage. There is no shortage of local and national lenders, so make a shortlist, contact each one, and compare what they have to offer.
Don’t assume that your current lender is the best lender for a cash-out refinance. Doing so could cost you money in the long run. If all else is equal, choose the lender with the most competitive interest rate.
With so many benefits, keep an open mind to applying for a cash-out refinance. It could be the best way to secure the cash you need at a competitive rate.
Have you ever applied for and used a cash-out refinance? How did you use the funds? Were you satisfied with the process and end result?