cash-out refinancing

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Post on 27-Jul-2015

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1. Cash-Out Refinancing 2. Cash-Out Refinancing The average interest rate remains historically low and home owners may be interested in refinancing their current mortgage or cash-out refinancing. As you pay off your mortgage, you accrue more equity. As this builds up you can gain access to cash to use on emergencies or other expenses. Cash-out refinancing is one way you can use your home as a tool to get money. NMLS ID#6606. All products are not available in all states. All options are not available on all programs. All programs are subject to borrower and property qualifications. Rates, terms and conditions are subject to change without notice. New American Funding. New American and New American Funding is a registered trademark of Broker Solutions, DBA New American Funding. All Rights Reserved.1/2015. For a complete list of our licenses, please visit: www.newamericanfunding.com/licensing 3. How Does It Work? 4. Associated Perks You will still have the same amount of equity, your new mortgage will just encompass the money you took to use on other expenses. You continue to build your equity on top of the amount you had prior to applying for cash-out refinancing. In addition, many homeowners apply for cash-out refinancing to nab a lower interest rate. So while you get access to cash, you also cut down the interest rate affixed to your new mortgage. 5. Using Your Cash 6. Investing Your Cash Cash-out refinancing can be used to increase the value of your current home. For example, if you plan on selling your property and feel that your kitchen is outdated, cash-out refinancing can provide you with the ability to pay for renovations before putting your house on the market. You can increase the value of your property and make a higher profit when you sell your home. 7. Requirements Zillow, an online real estate company, noted that some fees apply to cash-out refinancing just as they would to conventional refinancing. These include: Closing costs, interest on the cash received and interest on the mortgage amount Some homeowners may not qualify for cash-out refinancing. Lenders want to ensure - You have a credit score that is typically higher than what is necessary for traditional refinancing. You have built adequate equity which also lends to the loan- to-value ratio being no more that 85 percent. The home owner has resided in the home for at least a year. 8. Know Your Limits According to Bankrate, many lenders will limit how much cash you can take out. Typically, they will allow you to cash out a max of 80-90% of your built up equity. In some instances you can borrow more, but may be required to purchase private mortgage insurance. In addition, you should ensure that you know how much money you can afford to cash-out. If you take out money for expenses that don't provide you with a return, such as a vacation, evaluate whether it is something you can realistically afford down the road. 9. Take Careful Consideration "People have a budget in mind and they will manage to that budget versus saying, 'Give me as much money as possible. It varies by the consumer and their personal situation, but they won't necessarily push the outer boundaries of it. - Kelly Kockos, Home Equity Product Manager for Wells Fargo. "Too often these loans have made our houses a bank account and made the equity very accessible, which is not always a good thing. There is no reason to tap home equity unless you absolutely have to. - Alan Moore, Certified Financial Planning Professional for Serenity Financial Consulting VS. 10. Deciding If Its For You By piecing together a clearer picture of what cash-out refinancing entails, you can make an educated decision and feel more confident moving forward. You will want to calculate whether the extra fees and expenses for refinancing are worth moving forward and how you will ultimately use the money you decide to cash-out with. 11. Contact Your Loan Officer Today to Learn More About Cash-out Refinancing!