If you have lived in your home for a period of time that has allowed you to build equity through appreciation and monthly mortgage payments, you may be considering liquidating some of that equity through cash out refinancing.
Cash out refinancing means to refinance your home by paying off your existing mortgage, usually at a lower rate if possible, and borrowing off the equity in your home in the way of receiving a lump sum at the closing table.
Cash out refinancing is primarily used by people for various reasons, such as home improvement, college tuition, the purchase of a new car, a family vacation, etc.
Keep in mind, the money you borrow from your cash out refinancing is also tax deductible, so for example, using this money to buy a new car would make smart financial sense, as opposed to using a car loan to buy a car.
Cash out refinancing is a nice mortgage program because it gives you the freedom and the power to accomplish things that you otherwise would not have been able to do.
The mortgage industry is a very competitive one, so be sure to take your time and shop around. Allow for a few different lenders or mortgage brokers to assess your situation and base your decision on the program that best fits your needs and your budget. Good luck.
Jennifer Hershey has more than twenty years of experience in the Mortgage Industry as a loan officer. She is the owner of www.explainingmortgages.com/, a mortgage resource site devoted to making mortgage terms and products easy to understand.
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