Refinancing is the buzz today because mortgage interest rates are historically low. And when interest rates are low, it’s also an ideal time to think about refinancing with cash out. Let’s take a look at how to choose whether you refinance with or without taking cash out.
Home Improvement
When thinking about taking cash out with a mortgage refinance, it’s important to explore some of your goals and dreams. For example, consider whether or not you have some remodeling projects you have been wanting to do to your home. With spring coming, do you want to do some landscaping, and possibly build a deck with an outdoor kitchen? Perhaps you have been dreaming of remodeling your primary bath, creating a workout room or adding on a screened in porch. Home improvements are the number one reason people will refinance with cash out.
Debt Consolidation
The other reason most people will consider a cash out refinance is to consolidate debt. If you have been burdened with credit card debt, medical bills, student loans or other debt that feels overwhelming, using cash out to consolidate your bills into one monthly mortgage payment might be to your advantage. Using a cash out refinance to consolidate your debt comes with a commitment to stay disciplined so you don’t incur debt and end up feeling overwhelmed again.
One thing to keep in mind if you do a cash out refinance – your interest rate will most likely be higher than if you just do a refinance without cash out.
Lower Monthly Payment
Therefore, if you are simply wanting to refinance your current mortgage to take advantage of a lower interest rate, you will definitely want to choose a no cash out refinance option. When you lower your interest rate, you will most likely lower your monthly payments. This is always a welcomed advantage of simply refinancing without taking cash out.
Change in Term
In addition, if you are currently in a longer term mortgage like a 30-year fixed mortgage, you might want to consider doing a refinance with no cash out to change your mortgage to a shorter term like a 15-year fixed rate. Shortening your term will save years of interest on your loan.
You’ll also want to consider a refinance with no cash out if you want to change your adjustable rate mortgage (ARM) or balloon mortgage while interest rates are low, and you can lock into a fixed rate mortgage. The lower interest rates can potentially save you money, and also create some peace of mind when your mortgage interest rate is locked for the life of the loan.
If you have been hearing the buzz today about historically low mortgage interest rates, you’re not alone. It’s an ideal time to meet with your mortgage banker and find out if this buzz is right for you. Your mortgage banker can help you choose if it’s best for you to refinance – with or without cash out!
The great thing about working with a mortgage banker at Chelsea State Bank is we are local – you can pick up the phone and call us or visit us at one of our convenient branch offices. We are here to help you choose which mortgage program is right for your lifestyle and budget.
Simply call us at 734.475.4210 or visit us at https://info.chelseastate.bank/refinance to begin.
Loans are subject to credit review and approval.
