First let’s discuss what a cash-out refinance is. To do this we’ll look at a simplified example.
Let’s say you have a mortgage on a home with a current market value of $300,000. You paid $270,000 five years ago and have paid $20,000 toward the balance of the loan. That means you have a $50,000 equity in your home.
So you decide you want to do a VA cash-out refinance. This means you would take out a new loan for the current market value of the home ($300,000) and get the equity of the home (minus closing costs) back. You can use this money for anything from a remodel to paying off consumer debt.
Now that you know what a VA cash-out refinance is, let’s answer the question of whether or not it’s a good idea.
There are two big reasons to do a VA cash-out refinance. The first is that VA loan interest rates are currently hanging around the standard rate of inflation (that’s really low!) These low interest rates can save you a lot of money in the long run. The other amazing thing about these loans is that they are assumable. You can learn more about assumability by clicking here, but the basic idea is that a future buyer can take on your low interest rate loan. This can be a huge selling point if interest rates jump up to 8 percent!
So let’s say you have some other debts and bills, and you have a little equity in your home. Now that you know what a cash-out refinance is, and why it’s such a good idea, wouldn’t you agree that it’s the perfect time for you to look into a VA cash-out refinance?
Creekside Mortgage, Inc is here to help. Give us a call today at 800.920.5420.