Need some cash for debt consolidation or home improvements? With interest rates starting to rise, now may be the perfect time to tap into the equity you have built up in your home with a cash-out refinance.
Cash-out refinancing is taking out a new mortgage loan for an amount higher than what you owe on your current mortgage loan, and by taking advantage the equity you’ve built up, you can “cash-out” the difference between the new mortgage amount and the old one. And if the value of your home as gone up considerably, you can have access to even more cash. This refinance option is available if you currently have a conventional loan, FHA Loan or VA Loan.
A loan of this type is much more desirable for securing finances than using a credit card. The interest rate will generally be much lower, and the interest you pay is tax deductible.*
To put yourself in the best position to take advantage of a cash-out refinance, here are a few tips:
- Shop around for the best rates. You can also lock into a rate if your lender offers a rate lock program.
- Make sure the lender fees are low as well as the rate. Use the lenders’ APR to compare as this rate will include the interest rate as well as the fees.
- Maintain at least a 20% equity cushion in case home prices drastically drop, and you owe more than your home is worth.
- Try to get your credit score as high as possible to get the best rates. This can be done by paying off as much debt you can, paying bills on time, and staying current on outstanding bills.
To find out if a cash-out refinance is right for you, contact the experts at NASB at 855-465-0753 or for more information, click here.
*This is not intended to and does not constitute legal advice or financial / investment / tax advice. North American Savings Bank does not make any guarantee or other promise as to the results obtained. The consumer should consult a tax adviser for further information regarding the deductibility of interest and charges.