You’d be hard-pressed to find anyone willing to call 2020 a good year. Most of us are struggling in some capacity, and the future feels anything but certain. But if you’re fortunate enough to own your own home, one thing about 2020 is finally going your way.
Maximize record-low interest for life’s biggest expenses
There’s no debate about it: mortgage rates have dropped to unbelievably low rates. While traditional refinancing is a no-brainer, a cash-out refinance could also be a wise move for those in need of some extra cash. Rather than paying bills and for large expenses with a credit card, a cash-out refinance could free up additional cash at a fraction of the interest as that piece of plastic. Simply put, a cash-out refinance uses the equity in your home to free up cash. How you use that cash is entirely up to you.
Extra cash could cost you $0 extra per month
Here’s where things get interesting. Depending on when you last signed a mortgage document, the change in interest rate could very well pay for some if not all of your extra cash. While a traditional refinance could result in a drop in your monthly mortgage payment, a strategically crafted cash-out refinance could keep your monthly payments consistent while freeing up much-needed funds.
The catch? It’s all about equity
A cash-out refinance is essentially a loan to yourself that uses the equity you’ve built up in your home. If you’ve been paying against your mortgage for years, you know you’ve built up equity in the process. But if you’re like many homeowners, the value of your home has also increased over time. That could unlock additional borrowing capacity unavailable to you at initial signing. The bottom line: a cash-out refinance is dependent on your equity. If you’re fortunate enough to have accumulated equity in your home, you suddenly hold all the cards.
What now? Choose your lender carefully
A competitively priced cash-out refinance requires a lender who acts in their customers’ interest. Such is the well-earned reputation of Quicken Loans. Their online application and transparent process make refinancing a breeze. It’s why the customer service experts at JD Power and Associates have ranked Quicken Loans “best in class” ten years running.