Cash-Out or Cash Back Refinance
This plan allows you to refinance your mortgage for more than you currently owe. The difference and the equity is converted into cash for the homeowner.
Is refinancing right for you?
Here are the most common reasons for refinancing:
- You have a fixed-rate mortgage with a high interest rate, and are looking to get a lower interest rate
- You have an adjustable rate mortgage (ARM) and are looking to get a fixed rate
- You have two mortgages and would like to consolidate them into one
- You have a long-term loan and would like a shorter-term loan so you can pay it off and build equity more quickly
- You have a short-term loan and would like a longer-term loan so as to reduce your monthly payments
- You want to move from an interest-only mortgage to a loan that pays down the principal
- You want some extra cash to make a purchase or to pay off other debt
Benefits of refinancing
Refinancing makes sense if you fit into one of the categories listed above. If you’re curious about your specific scenario, reach out today and we’ll take a look!
Four common refinancing options:
Lower Fixed-Rate Loan
If you currently have a high fixed-rate mortgage and the rates have dropped due to market conditions, then you may want to refinance to a low fixed-rate loan. Also, if you have an ARM, you might consider this option in order to get the security of a fixed rate. Even if your adjustable rate is low now, it is not guaranteed to remain that way; but if you get a low fixed-rate loan, then you lock that low rate in for the life of the loan. This option is a good choice if you are not planning on moving within the next five years.
Shorter-Term Loan
If your main goal is to quickly build up equity and to pay off your mortgage sooner, then the shorter-term loan is probably your best choice. A lot of times, if you refinance to this type of loan, your monthly payments will be higher, but you will pay substantially less interest and your mortgage will be paid off sooner. Also, you would benefit from a larger tax deduction on interest if you move from a 30-year fixed to a 15-year fixed loan. There are some cases, however, in which you may be able to refinance to a shorter-term loan without raising your monthly payment -if you’ve had your current mortgage for enough years.
Longer-Term Loan
If your current monthly payments are higher than is comfortable for your financial situation, then you might want to consider refinancing to a longer-term loan. This will result in a decrease in your monthly payments, since you will have more time to repay the loan. Examining your current mortgage and knowing how you would like to improve it are the first steps you need to take when starting the refinancing process. Once you know this, you can choose the option that will best help you achieve your goals.
MyLendingPal, Inc
NMLS #1734346
Founded in 2018, MyLendingPal is dedicated to making the home buying and refinancing process as smooth and efficient as possible. We understand that navigating the mortgage landscape can be daunting, which is why we are committed to providing personalized service, competitive rates, and a streamlined experience.
Our Mission:Â At MyLendingPal, our mission is to empower you with the knowledge and tools necessary to make informed decisions about your mortgage needs. Whether you’re a first-time homebuyer or looking to refinance for better terms, we are here to guide you every step of the way. Our goal is to simplify the mortgage process and help you achieve your financial goals with confidence.
hello@mylendingpal.com(470) 839-8901
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