Pittsfield, MA -- (SBWIRE) -- 03/25/2013 -- Real-estate-yogi.com knows something about this process and wants to share that information, including:
- How it Differs from Equity Loan
- Ways in Which it is Helpful
- Reasons to Refinance with Cash-Out
- Don’t Break the Piggy Bank
Equity Loan vs. Cash-Out Refinance
A cash-out mortgage refinance is a substitution for an original mortgage and an equity loan is a separate loan. Generally, interest rates are lower on the refinance than on the equity loan. One pays closing costs for refinancing the mortgage; they aren’t required for an equity loan. It may be better to take the home equity loan to accomplish one’s goal.
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How Refinancing Helps
If one’s child is ready to go off to an Ivy League university, doing a refinance of one’s mortgage with cash-out can help defray some of the costs. When a family member had a long hospitalization and the bill for it just came in, refinancing with cash-out can help. Basically, any high-cost expense that one does not currently have the money for can be covered by refinancing the mortgage with cash-out. By the same token, it can also be taken care of with a home equity loan. It’s up to the individual to choose.
Why One Should Not Refinance
Looking into cash-out mortgage refinancing is a smart thing to do. Smarter still is knowing exactly what the money will do. Remember that one will be making possibly higher payments on the refinance for 20 – 30 years, so don’t refinance to purchase a car. It’s unwise to refinance the mortgage to buy new kitchen and laundry appliances. Would it really be worth paying for them for up to 30 years? More likely is that they’ll be long gone before they’re totally paid off.
Don’t Waste Savings
A home is just like a piggy bank these days. One can jump right in and use its equity by turning it into credit or cash. A cash-out mortgage refinance is a wise method to employ if one wishes to add a room onto his home to increase its value. It is not such a great tool for putting in a swimming pool. Consider very carefully what the cash-out money needs to do and don’t squander the money in the piggy bank by using it frivolously.
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