How does a cash out refinance work?
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What is a cash out refinance?
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A cash-out refinance is considered a second mortgage out on your home.
A
A cash-out refinance is a way to both refinance your mortgage and borrow money at the same time.
B
A cash-out refinance is when you refinance to get cash that can only be used for home improvements.
C
None of the above
D
A Cash out refinance gives you access to the equity in your home. It allows you to take the difference between your old loan and new loan in cash.
B
A cash-out refinance can allow you to get cash in hand to use for investments or payoff high debts to increase your overall monthly cash flow.
A
You do not have to pay the money back that you borrow.
B
Refinance rates tend to be lower than the interest rates on other types of debt or loans.
C
Both A and C
D
What are some of the advantages of doing a cash-out refinance?
Answer:
Cash out refinancing is beneficial because it can increase monthly cash flow and allow you to make good use of the funds you take out.
D
You can borrow 80% of the value of your home without paying PMI.
A
You can borrow as much cash as you need.
B
You can get up to $10,000 regardless of your home’s value.
C
You can borrow up to 50% of the value of your home.
D
What is the maximum amount of cash you can get through a cash out refinance?
For example, if your house is worth $200,000 and you owe $100,000 on your existing mortgage, you have $100,000 in available equity. Keeping the maximum 80% LTV ratio requirement in mind, you may borrow up to an additional $60,000 with a cash-out refinance.
A
Answer:
To calculate this, multiply
your home’s value by 80%
$200,000
x 0.80
$160,000
Then subtract your outstanding loan balance from that amount
$160,000
- $100,000
$60,000
Pay for home improvements or big expenses.
A
Pay for college educations.
B
Consolidate higher interest debts.
C
All of the above.
D
What can you do with the cash received from a cash out refinance?
Answer:
D
That’s right! The cash you receive can be used for any purpose, such as debt consolidation, home renovations or an investment property purchase. If you’d like to see how much cash you can get, call to speak with one of our licensed loan advisors today.
If you’d like to see how much cash you can get, call to speak with one of our licensed loan advisors today.
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