Amplify Your Finances With A Cash-Out Refinance

If you currently own your own home and your property has accumulated a solid amount of equity, you could potentially turn that value into supplemental funding to spend on other financial needs. A cash-out refinance allows a borrower to take out an updated mortgage for an amount that is larger than the existing loan and keep the cash difference. If you are interested in your refinancing options in West Palm Beach, St. Pierce, or Tampa Bay, Florida, CTC Mortgage is here to help. Read on to learn more about how a cash-out refinance works.

How Does A Cash-Out Refinance Work?

When you take out a mortgage to buy a home and continue to make your monthly mortgage payments, the equity of your home increases. Home equity is basically the amount of your property’s value that you own as you pay off the loan. A cash-out refinance allows a borrower to refinance their property with a new loan that is more expensive than the original loan and then keep the leftover dollar amount. It is common for most borrowers who opt for a cash-out refinance to spend the additional funds on consolidating debt, home renovations and updates, or any other pressing financial need.

What Are The Pros And Cons Of A Cash-Out Refinance?

A cash-out refinance can offer several benefits for some borrowers, however, it may not be the most suitable option for others; you will want to work with your lender to ultimately determine the best option for your situation. Some advantages of a cash-out refinance include the option to increase the value of your home through renovations, lower interest rates, the potential to get a tax deduction, and you have supplemental cash to use for any purpose you need. It is important to note that there can be potential drawbacks to this option, including it will reduce your home equity, you will still be required to pay closing costs and private mortgage insurance, there is a foreclosure risk if you are unable to make your new loan payments, and the length of time it will take to pay make your loan payments will be extended.

How To Qualify For A Cash-Out Refinance

In order to be eligible for a cash-out refinance, there are certain requirements that need to be met, including

● A decent credit score of at least 620 or higher

● A substantial amount of home equity needs to be built up in the property

● A debt-to-income (DTI) of 50 percent or lower

● You will be required to provide verification of income, assets, and financial stability

A cash-out refinance can be a great option if you are interested in refinancing your home and supplementing your finances. If you are interested in learning more about a cash-out refinance in West Palm Beach, St. Pierce, or Tampa Bay, Florida, contact CTC Mortgage today for a consultation.

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