A cash out refinance may be the answer. Depending on the equity in your home, a cash out refi may be an option. A cash out refinance replaces your current loan with a new loan. It can allow you to take out money to pay off other debt or for home improvements.
Many homeowners are using credit cards to get buy as expenses increase. The interest rate on credit cards can be very high, the rate on personal loans can also be high. Using the equity in your home may be a way to consolidate higher rate credit cards and lower your monthly payments. It gives you one monthly payment instead of many payments depending on what debt you have. If you are looking at home improvements, a cash out refi can also be a great way to pay for the improvements.
There are different ways to refinance your home. If you have a conventional loan, you will qualify the same way you did when you bought your home. If you have a VA or FHA loan, there are streamline refinances that can make it easier but may not allow you to get cash out. If you currently have a FHA loan, you may want to look at a conventional loan to get rid of the mortgage insurance you are paying and allow you to get cash out.
There re some things to remember with a refinance. The closing costs will be higher than a home equity loan. If you are thinking about buying a new home soon, you may not want to use the equity in your home. You may start your loan over, meaning if you have been paying on the loan for a few years, you could go back to a 30 year loan. There are shorter options available depending on what you can qualify for.
Talk with your loan officer about your options. I always look at what you are paying off and we talk about the best way to move forward. Your interest rate may be higher but if you are paying off higher rate credit cards, it may make sense. The most important part is to remember that you don’t want to run up the credit card balances again!
Leslie Vanderwerf, NMLS ID#335509, CrossCountry Mortgage LLC, An Equal Housing Lender, NMLS#3029 – Email – Website
