When you find yourself in need of some extra cash on hand for a big project or a goal, you may be overwhelmed by the different loan options available to you. But are you overlooking your single most significant asset when considering taking on additional loans along with your mortgage?
A cash-out refinance can let you take out a new loan while giving you extra money for your immediate needs. By taking out some extra cash in your new loan on top of what you owe on your home, you’re getting the funds you need without adding as much to your debt as a new loan would.
What are some of the ways you would put your extra cash to use? When it comes to a cash-out refinance, these four ideas will help you make improvements to your home and lifestyle.
- Home Improvement
If your kitchen is falling apart, renovating it is as much a luxury as it is a need. However, even small home improvement projects can run upward of $20,000, which is when a cash-out refinance lets you access that needed money.
- Paying Off Debt
Depending on your mortgage, interest rates will typically be no higher than 5%. But if you’re hanging onto credit card balances, those could carry interest rates above the average of 16.6%.When you’re struggling to make payments on debt, a cash-out refinance can help you take advantage of lower mortgage interest rates to pay off balances with higher ones.
- Buying Another Home
If you’re looking for ways to increase your income, buying an investment property may be a ticket to a more comfortable future. You can do a cash-out refinance to purchase a rental property in Orange County, and that income could cover even more than just your mortgage payments.
- Planning For The Future
Do you have a 401k or an IRA? If you haven’t been thinking about the future, a cash-out refinance can help you get some money on hand to fund new savings accounts. Not to mention, many retirement accounts, in particular, will give you tax advantages so that you could save even more in the long run.