For example, if you owe $200,000 on your home and it\u2019s now worth $400,000. Let\u2019s assume that refinancing your current mortgage means a lower interest rate and you decide to use the cash to renovate your home. Lenders generally require you to maintain at least 20 percent equity in your home after a cash-out refinance, so you will be able to withdraw up to $120,000 in cash (minus closing costs that range from 3% to 6%).<\/span><\/p>\nFor example:<\/strong><\/span><\/p>\nYour home is worth $400,000 and you can get a refinance loan for up to 80% of the value.<\/span>
\n$400,000 x 80% = $320,000<\/span>
\nMinus $200,000 to pay off your current loan, so $320,000 – $200,000 = $120,000<\/span>
\nMinus Closing costs of ranging from about 3% to 6% of closing costs, let’s just use 5% for closing costs, so minus the $120,000 x 6% = $6,000<\/span>
\nMinus the $6,000 in closing costs, so $120,000\u00a0 – $6,000 = for a net cash-out of $114,0<\/span>00.<\/span>[\/vc_column_text][vc_column_text]How can I spend the money from a Cash-Out Refinance?<\/span><\/span><\/strong><\/span>[\/vc_column_text][vc_column_text]Cash-Out Refinance Loans allow you to take cash out of your home equity to take care of concerns like paying off debt, auto or personal loans, credit card debt, making home improvements, make a large purchase or funding school for you or your family. Do whatever you please with the funds!<\/span>[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column width=”1\/1″]<\/div>[vc_row_inner][vc_column_inner]
Refinance FAQ’s<\/h1><\/div>[\/vc_column_inner][\/vc_row_inner][\/vc_column][\/vc_row][vc_row][vc_column width=”1\/3″]
Why should I lower My Interest Rate?<\/strong><\/span><\/p>\nRefinance into a loan with an interest rate that is lower than your existing rate by qualifying for a lower rate based on market conditions or an improved credit score. Lower interest rates typically result in lower interest costs, which means significant savings over the life of the loan. Doesn’t that sound better?<\/div>