For homeowners who have built equity in their current property and are seeking additional money for renovations, upgrades or other life events, refinancing a mortgage through a cash-out refinance offers the chance to access additional funds without the need for a traditional loan.
In these loans, a new mortgage is financed for an amount larger than the current total, with the difference being paid in cash to the homeowner. Several benefits of a cash-out refinance include low interest rates, flexibility to use the money at the homeowner's discretion and a variety of tax advantages.
However, before applying for any kind of mortgage refinance -- cash-out or otherwise -- it's important to understand if and why refinancing is the right option. Below, the lending experts at Bridgeport-based Laurel Road explain how to approach the potentially complex decision and make the smartest choice for you and your home.
Shortening the term of a loan or reducing the total amount paid are common reasons for refinancing, but lowering a monthly payment amount and combating rising interest rates are also valid reasons for those looking to refinance.
Once the decision to refinance has been made, owners can begin by requesting their most up to date credit score and researching their property's value by scheduling an assessment. Those requesting a loan should also use mortgage rate calculators to see roughly how much their new monthly payments would be. In addition to potential increases in these payments, refinancing can incur a host of other costs like application fees, appraisal fees, attorney fees and title insurance. It's important to factor these sometimes unseen expenses into a refinancing budget.
With financials set, homeowners should gather the necessary paperwork and consult with a certified lender like Laurel Road. Banks will often ask for homeowners to provide information on insurance, current employment, their current mortgage agreement and other financial information. Once approved, owners are generally able to lock in a rate and close within 60 days, though this process is often much shorter with Laurel Road.
For those looking to view personalized mortgage options at competitive rates, Laurel Road has a variety to choose from. Coupled with smart technology and personal support, their expertise makes refinancing a home turnkey and simple.
To learn more about mortgages, refinancing and the additional loan services available at Laurel Road, click here.