Make Your Money Work For You with Cash-Out Refinancing

If you’ve just bought a new home or love the place you have been living in for awhile, there is a high chance you’ve heard of refinancing. It is commonly used to make your home more affordable but did you know with Cash-Out refinancing you could take the equity and turn it into cash to invest in almost anything you’d like?

In this article we will uncover the facts about cash-out refinancing and unlock the mystery behind trading equity value for cash-out funds. 


What Is Cash-Out Refinancing?

Cash-out refinance is when you replace your current mortgage agreement with something a little bigger and then pull the difference as a lump sum of cash.

Let’s give an example: Say you have a current mortgage where you still owe $130,000 to your lender. You go out and get a new mortgage loan for $180,000 and so happen to find a better rate. Then you withdraw the difference of $50,000 in cash and viola! You’ve just done a cash-out refinancing transaction. 

One thing you should keep in mind when cashing out is your mortgage still needs to be paid off. Even with better rates you may still see a larger payment month to month due to the larger loan size. Make sure to plan for that drawback of cash-out refinancing. To avoid large increases, cash-out refinancing works best when you’ve already paid off a larger chunk of your original loan.


How Much Cash-Out Funds Can You Take?

There are several factors that determine how much you are eligible to receive from your cash-out refinancing plan. Things like the lender you are working with, your income, your home equity value, payment history and more.

In order to assess your situation specifically and discover how much cash-out refinancing funds are available to you, speak with your personal home loan advisor.


What Can I Do With The Funds?

Now that you know the basics of cash-0out refinancing and how to get funds. Let’s explore some of the possibilities of using those funds to improve your quality of life.


Investing In More Real Estate

Depending on the amount of cash-out funds you are able to receive, many refinancers simply invest into a second or third property. Whether it is a small condominium or apartment complex for passive income, a getaway home for the family or a cabin up north in the woods. Cash-out refinancing is a great place to get funded for those with a great credit history.

Home Improvement Projects 

Have you always wanted to add a patio, wrap around deck, or extension to your home? Maybe some things have gotten neglected and you just need to rebuild what you have. Cash-out funds can be a great place to get much needed work done around your property. 

Emergency Expenses

Life can kick you sideways at times. It’s nice to know there is another way to pay bills or get out of a sticky situation. Cash-out refinancing allows you to access funds in a fairly quick time frame to cover the unexpected.

Continuing Education

Maybe your career has been taking a downturn. You remember a long lost passion you had and want to start a business or go back to school. Now you’ve got the ability to pay for it through cashing out on your home loan.

Consolidate your debt

Debt consolidation and cash-out refinancing are a great combo. By consolidating your debt (works especially well with credit cards) and drawing cash out of a refinancing loan, you can make the monthly payments bearable or even get rid of your debt all together! Speak with your financial advisor and home loan consultant before attempting this method.

Do Nothing And Invest The Cash!

Time plus money equals more money if you know how to make it work for you. You can take your cash-out funding and put it into high interest savings accounts, stocks, bonds, assurities, real estate, bitcoin, tech startup, or whatever method you choose of putting your money to work for you. Just sit back, relax, and make profits. 


Cash-out Refinancing In Summary.

It all comes down to this. Your Cash-out refinancing funds are able to be used for almost any purchase or investment you’d like. Take a selfie with it all if you wish! However, a word to the wise – if you decide cash-out refinancing is right for you, then put it towards something that will make a real impact on your life situation. You want to constantly improve your financial stability while holding a large loan. Invest into your future and turn that cash into a platform for achieving your dreams. 

If you are already in a good place and are considering cash-out refinancing, we encourage you to speak with one of our expert home loan consultants today.