The Pros and Cons of Cash-Out Refinances
In a cash-out refinance, you refinance your existing loan with a new larger loan and take out the difference between the two in cash.
For instance, say your home’s current value is $150,000 and you owe $70,000 on your mortgage. Refinancing your mortgage for $100,000 would leave you with an additional $30,000 to put toward other expenses.
According to Bankrate.com, mortgage rates continue to hover just under 4 percent, well below the historical average, so this may be a good time for homeowners with enough equity in their home to look into refinancing.
You May Have More Equity Than You Think
Homeowners might not realize how much equity may be available to them, notes Steve Deggendorf, director of business strategy in Fannie Mae’s Economic & Strategic Research (ESR) Group.