Are There Benefits to Obtaining a Cash-Out Mortgage Refinancing?
There are many reasons a homeowner might want to tap into the equity they've built up in their home, whether it's to pay for a home repair, buy a new car, or finance a once-in-a-lifetime vacation. A cash-out refinance can be a good way to access a large amount of money for these purposes – especially if you’re able to secure a lower rate on the new home loan than you were paying on the original mortgage. It's important to keep in mind, however, that in seeking mortgage refinancing, you're using your home as collateral for the new loan. To avoid risking your home, you'll want to ensure you use the money in a way that provides some kind of financial return. Below are a few good reasons to consider cash-out mortgage refinancing.
Using the money you've received from cash-out mortgage refinancing to consolidate your debt is a smart way to avoid taking out a personal loan, which could cost you thousands of dollars in interest over the term of the loan.
Credit Card Payoff
Another good way to use the money accessed via cash-out mortgage refinancing is to pay off your high-interest credit card balances. Not only does this eliminate your monthly credit card payments, thereby creating more room in your budget, but it can also give your credit score a significant boost.
Income Tax Reduction
The interest you pay on credit cards cannot be deducted from your taxable income. Mortgage interest payments, on the other hand are tax deductible. Consider using cash-out mortgage refinancing to lower your income tax bill and receive a more sizeable tax refund.
Cash-out mortgage refinancing is a great way to access the money needed to make a major home renovation that could increase the value of your property.
Investment Property Purchase
Use the money from your cash-out refinancing to purchase an investment property – such as a duplex, triplex, or vacation rental home. This will increase your monthly cash-flow while also allowing you to continue accumulating equity over time.
See the Benefits
If you're trying to decide on the best way to use the money from your mortgage refinance, we can help. Contact us for more information about how cash-out mortgage refinancing can help you achieve your financial goals.