Believe it or not, refinances still make up almost one third of all mortgage transactions, even though mortgage rates are higher than in previous years. You may be wondering why this might be…
First of all, most homeowners have record levels of equity in their homes. The Federal Reserve data reveals that the total value of owner-occupied real estate registered at an eye-popping $48.2 trillion!
On the other hand, many consumers have amassed a large amount of debt, paying much higher rates of interest, thanks (in part) to the Fed’s mismanagement of inflation.
Do you know what your overall, blended interest rate is when considering your mortgage, car payments, HELOC, and credit card payments?
Interestingly, most out there are only making the minimum payments, with no path to paying off their debt.
Today’s homeowners are benefiting from a type of refinance where they pull that equity out of the home to pay off those debts, saving money on the overall monthly payments.
There are several compelling reasons why a cash-out refinance can be a beneficial move.
Debt Consolidation
By consolidating high-interest debt into a lower-interest mortgage, homeowners can potentially save money in the long run.
I have a Debt-Consolidation calculator and a Blended Interest Rate calculator available to analyze all client situations, as well.
For instance, paying off credit card debts, HELOCs, car loans, or personal loans with a cash-out refinance can reduce overall interest payments, saving money on monthly payments and providing more financial breathing room.
Immediate Funds Available
Accessing the equity built up in a home through a cash-out refinance can provide funds for a wide variety of uses.
Whether it’s home improvements, debt consolidation, paying for education, or other significant expenses, this approach allows homeowners to tap into the equity they’ve accumulated.
The interest rates for mortgages are often lower than rates for personal loans or credit cards, making a cash-out refinance a potentially more cost-effective way to access funds.
Adding Flexibility
A cash-out refinance provides flexibility for homeowners to manage their finances according to their needs and goals.
Whether it’s securing funds for an investment opportunity, addressing unforeseen expenses, or improving the home’s value and livability, this financial tool offers a versatile way to leverage the equity in one’s home for various purposes.
Additionally, there are ways to gain equity at an accelerated pace and significantly shorten the length of your mortgage, by applying those savings as an additional payment each month.
Call me today to review your current debt situation and see if I can help!
The blog postings on this site represent the positions, strategies or opinions of the author and do not necessarily represent the positions, strategies or opinions of Guild Mortgage Company or its affiliates. Each loan is subject to underwriter final approval. All information, loan programs, interest rates, terms and conditions are subject to change without notice. Always consult an accountant or tax advisor for full eligibility requirements on tax deductions.
