Your home is a resource for ready-to-borrow cash if you are willing to give up some of the equity youve built up. Here is what you need to know about getting cash back when refinancing your mortgage. Refinancing your mortgage and taking cash back means you will take out a mortgage for more than you owe on your current loan. The difference between the old mortgage and the new mortgage is the amount you will receive in cash at closing. Suppose for example, you owe $80,000 and your home is currently valued at $150,000. If you want $30,000 in equity for your renovation project, you could refinance for $110,000 and take out equity to renovate your home. This money can be used for any reason and the interest on the loan is tax-deductible because it is secured by your home. Because of this tax-deduction, using home equity makes better sense then unsecured loans. Refinancing your current mortgage and taking cash back will usually save you money over a home equity loan because you should qualify for a better interest rate. The interest rate on a home equity loan will always be higher then a first mortgage due to increased risk for the lender. To learn more about your mortgage refinancing options, including how to avoid common homeowner mistakes, register for a free mortgage guidebook. |
