Homeowners consider refinancing their home mortgages for a variety of reasons. Sometimes they’re looking to take advantage of a more competitive interest rate or an improvement in their credit score. Other times, they’re looking to capitalize on the equity they’ve earned to help with financing other investments and expenses.
Whatever the reason, refinancing your New York home can be a terrific way to restructure your debt and your finances in a more advantageous way.
When it comes to refinancing a mortgage, there are various options to consider. One popular option is cash out refinancing.
Basically, cash out refinancing involves refinancing the current mortgage you have on your home to cover more than what you owe, then keeping the difference in cash. Essentially, this lets you take cash directly from the equity you’ve earned in your home.
Your new loan will be higher than your previous loan, as it will cover what you still owe on your home as well as the cash you took out when you refinanced.
While owing more on your mortgage may seem intimidating, a cash out refinance can free up money that would have otherwise been tied up to cover other expenses and help you pay off other debts. This can prove to be very advantageous in some circumstances.
There are a few common reasons that homeowners opt for a cash out refinance:
Having some extra cash on hand can provide you with the opportunity to finance things you otherwise might not be able to afford, like a vacation. Keep in mind, however, that you’ll need to be very fiscally responsible if you choose to use the money from your cash-out refinance for this reason, as you won’t be earning money back on your investment.
You’ll ultimately still be responsible for paying this money back through your refinanced mortgage, so you’ll want to be absolutely sure you’re in a position to cover this – otherwise you could put your home at risk.
Many people opt for cash out refinancing in an effort to pay off other loans and consolidate their debt. Having some extra cash on hand can help you to pay off credit card debt, car loans, student loans, and other financial obligations. This can benefit you firstly by consolidating and simplifying your debt, but also by helping you to pay off higher-interest loans and debt more quickly, which can save you money in the long run!
Higher education is expensive! A cash out refinance can provide you with money you can invest in a college savings fund or give you more cash on hand to cover room, board, and tuition expenses.
A cash out refinance can be immensely helpful when it comes to covering the expenses associated with home renovations, upgrades, and improvements. Whether you’re looking to redo a bathroom, purchase a new roof, or put on a completely new addition, cash out refinancing can help to make it possible by freeing up some cash to help you pay for the renovations. Additionally, these types of investments can help you to build even more equity in your home, which can be advantageous and help to boost the value of your home long term.
Check out this video for a quick review of common cash out refinancing scenarios.
Cash out refinances are pretty common and they’re not especially risky as long as you’ve planned accordingly. If you’re prepared to cover the added expense of having a larger mortgage to pay off and you’re planning to use the cash you’ve taken out of your home equity responsibly – or to generate additional return on an investment – then cash out refinances can be a terrific opportunity.
On the other hand, if you’re hoping to use the cash generated from your cash out refinance to cover a one-time expense, like a new car or a vacation, that won’t provide you with additional cash in the long run, you’ll want to be sure you’re in a financial position to do so without putting your home at risk
Working with an experienced mortgage professional can help you weigh your options and decide if the benefits of a cash out refinance outweigh any risks that might be associated with your specific situation.
If you think a cash out refinance on your NY home is the right option for you, the next step is to get in touch with a mortgage broker or lender to help explore your options. Since cash out refinancing can be contingent on a variety of factors, you’ll want to partner with an experienced mortgage professional to ensure that you end up with the refinance option that’s right for you.
At Maple Tree Funding, we work with dozens of lending institutions and have a wide variety of refinancing programs available. Because we have access to so many lenders and programs, we can offer you competitive options and mortgage rates that you may not be able to find elsewhere.
Our team of experienced mortgage professionals knows the ins and outs of cash out refinancing in New York and can help you explore the pros and cons, and learn about the advantages this mortgage refinancing strategy has to offer.
Wondering if Maple Tree Funding is the right partner for you when it comes to refinancing your home? Learn more about the benefits of working with our team here.
Curious about the types of home loans available in New York? Review some of your options here.