Cash-Out Refinancing

Whether you’re looking to make expensive home improvements, pay off some debt, or just need some cash for personal reasons, cash-out refinancing can be a great option for many people. Below you’ll find more information on cash-out refinancing and how it can help you.

What is Cash-Out Refinancing?

Bankrate defines cash-out refinancing as, “A cash-out refinance is when you refinance your mortgage for more than you owe and take the difference in cash.” Popular home buying and selling site Zillow explains this in an easy to understand way, “Let’s say you own a $300,000 house and still owe $200,000 on the current mortgage. (This means you’ve built up $100,000 in equity – a fancy word for ownership). Now let’s say you want some extra cash to the tune of $30,000. You could do a cash-out refinance to get this money. If you did this, you’d get a new loan worth a total of $230,000 (the $200,000 you still owe on your home, plus the $30,000 you’re going to take out in cash).”

What Can I Use the Cash For?

There are little, if any, restrictions on what you do with the cash once you’ve refinanced your home. With that said, there are smarter things to spend your cash on that what some people may choose. One of the most popular things people spend it on is a major home renovation project, such as redoing their kitchen or finishing a basement. Many other people also use the cash to pay off credit card debt. This can even improve your credit score because you’re putting the money towards paying off credit cards you owe money on. This can also help you get a tax benefit when you move your credit card debt to mortgage debt because you can deduct mortgage interest on your taxes.

If you’re wondering if you’re eligible for a cash-out to refinance or want to see if it’s the best move for you, contact the experts at Pacor Mortgage. We can help you assess your situation and see if a cash-out refinance is right for you. Give us a call at 773-881-7744 to set up an appointment, or visit our website to learn more about refinancing with Pacor Mortgage.