Refinancing your Mortgage can be a Great Way to Access Funds

Do you have a home improvement project that you have been eager to start?  Or would you like to roll your mortgage payment and all or most of your bills into one payment to improve your monthly cash flow?  A cash-out refinance could be an excellent solution.

What is a cash-out refinance?

A cash-out refinance is simply replacing your exiting mortgage with a larger mortgage and giving you the difference in the two loan amounts.  This makes sense especially if you can keep a similar interest rate on the new loan or better yet, get a lower interest rate on the new cash-out loan.  In cases where current interest rates are somewhat higher or much higher than your current mortgage interest rate, you may want to consider doing a home equity loan instead of refinancing your existing mortgage in order to preserve the lower interest rate from which you currently benefit.  Visit our Home Equity Loan Page for more info on home equity loans.

How much can I borrow?

Conventional loans will allow you to borrow 80% of your home's value when you are doing a cash-out refinance.  So if your home was valued at $400,000, you could access $320,000.  If you currently owe $200,000 on your current mortgage, that loan would get paid off and would leave $120,000 for home improvements, bill consolidation, or any other purpose.  FHA loans have the same 80% "LTV" rule (Loan to Value) as conventional loans.  Note, however that VA loans actually allow up to 100% LTV so if you are a qualified service member, you may be able to access even more funds when doing a cash-out refinance.

If you would like additional information about doing a cash-out refinance, give us a call at 803-771-0080 or fill out the short form on this page and we will respond promptly.