Nothing lasts forever…and that includes the record low rates of 2021. Even with the higher interest rates that we've seen so far in 2022, refinancing may still make sense. Home values have increased dramatically over the past few years. For refinances, these factors will show a decrease in rate/term refinances and a focus on a cash-out refinances. Most current homeowners have accumulated a significant amount of equity, which means they are more likely to find benefits in a cash-out refinance. So is it the right move for you? We've laid out the most common uses for this type of refinancing so you can explore the possibilities. Like always, your team at Lend Smart Mortgage is here to help and support you in your home financing journey. Feel free to contact us with any questions or to start the process.
Current Home Upgrades & Renovations
If you love the house you live in, but want to make some small (or big) changes, you're not alone! Home renovations are one of the top reasons people pull cash out through refinancing; most of the time it's a smart move, too! Home improvements can not only transform your home into what's been envisioned, but they can also increase the value of your home. Projects like updating flooring, upgrading the kitchen and revamping bathroom fixtures are some of the best ways to increase value.
Preparing for Large Expenses or Paying Off Debt
The pandemic has shown us that we can't always predict the future. Many people have been inspired by this to start focusing on their finances and become more financially secure. If you're looking to free up some space in your monthly budget, a cash-out refinance might be a good idea. Consolidating higher interest debt like credit cards, student loans and personal loans with a cash-out refinance could be a step toward a better financial future. You'll definitely want to consult with your tax advisor too, often the mortgage interest is tax deductible – an added bonus!
Buying a Second Home
If the pandemic has shed some light on your desire to venture out of your current surroundings, we get it. You might want to consider buying an investment property. Owning a rental property has numerous financial benefits including an additional source of income for you, offsetting the costs associated with owning a vacation property, and potential tax deductions. Using the cash from the cash-out refinance to pay off the down payment can save money in the long run because it lowers the monthly payments. This could be the boost you need to make your dreams of beach-front life a reality!
As you can see, there are many scenarios where a cash-out refinance may be especially beneficial. Everyone's situation is different; we recommend consulting a Lend Smart Mortgage Loan Officer who can help you determine if a cash-out refinance is right for you: www.LendSmartMortgage.com.