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  • Mark S.

Should I do a cash-out mortgage?

Is it time to put some of your home’s equity to work and take some cash out against your home's equity? Cash-out refinances can make a lot of sense to many people, especially since your home's equity has likely increased substantially in the last 18 months.



Your home is likely your biggest investment, and you may be sitting on hundreds of thousands of dollars in equity, especially given the hot real estate market of 2020 and 2021. But how can you access that equity and put it to work? One possibility is as cash-out mortgage loan to access some of your hard-earned equity for one (or more) of the following reasons:


Consolidate or eliminate debt— You have credit card debt, auto loans, student loans or even previous home equity loans that are accruing interest at a much higher rate than what you could be paying on your home mortgage. With a cash out refinance, you could significantly lower your overall monthly debt obligation by consolidating multiple payments into one mortgage payment at a lower interest rate, potentially saving thousands in interest expense and strengthening your credit scores.


Make improvements on your home— Have you always wanted to finish that basement to better fit a growing family? Or how about adding landscaping or a pool to your backyard? You may be sitting on all the cash you need to realize those dreams, and you might be surprised how little per month it could cost you given today’s low interest rates.


Put the extra cash to work in an investment— Maybe it’s time to replace that old beater of a car, or perhaps you have been wondering how to fund your child’s (or your) college education. The cash equity in your home might be just the ticket you need to make those come to life. (Not to mention the fact that mortgage interest expense could be tax deductible.)


Here’s something many homeowners don’t consider: When you get a cash-out mortgage, you will typically pay a rate premium for the privilege of accessing your home’s equity – that rate premium can result in mortgage rates as much at .5% higher than standard "par" rates. Did you know that after a relatively short period of time (perhaps as low as 6 months) you might be able to refinance your mortgage again with a conventional non cash-out mortgage at a lower rate?


With rates still near all-time lows, it might be a good idea to see if you can refinance your home and put put your equity to good use. Contact us and let’s take a look. Or, download our free ebook: "5 Signs if Could Make Sense to Refinance".

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