Strategic cash-out refinancing
Refinancing a mortgage loan has become a popular strategy for getting a new lower interest rate. However, cash-out refinancing can also be a smart strategy to achieve other personal financial goals.
What is a cash-out refinance?
Cash-out refinancing is when a homeowner refinances their mortgage to a completely new mortgage and, in the process, borrows more money than what is needed to pay off their current mortgage. The first mortgage is paid off and the homeowner gets cash-out at closing, which is a lump-sum payout of the extra cash amount.
Benefits of a cash-out refinance
A cash-out refinance can be strategic in many ways, especially when the cash is used for improving your financial position. Here are some of the benefits of a cash-out refinance:
- Increased spending power. Having access to cash lets homeowners benefit from their money. There are no restrictions on how the cash can be used. You can pay for your own or a child’s college tuition, pay for a wedding, pay business expenses, pay off medical bills, and more.
- Home improvements and renovations. One of the best uses of cash out is to reinvest it in your home by making value-added updates, such as a new roof and windows, or updating the kitchen and bathrooms.
- Consolidate debt. Using the money to pay off high-interest credit card debt or student loans is a financially smart use of cash-out.
- Tax deduction. In most cases, homeowners can deduct all home mortgage interest. How much you can deduct depends on the date of the mortgage, the amount of the mortgage, and how you use the mortgage proceeds. Check with a tax professional for more details on whether your refinanced mortgage interest is tax deductible.
If you are ready to refinance an adjustable-rate mortgage or refinance your mortgage for any other reason, a cash-out refinance is a convenient strategy to consider.
Applying for a Credit Union of Southern California cash-out refinance easy for everyone!
You can apply Online, call the CU SoCal Home Loans team at Center at 800.698.7196, or email us at [email protected].
