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You are here: Home / Our Tips / When a Cash-Out Refinance May Be a Good Idea

When a Cash-Out Refinance May Be a Good Idea

October 11, 2021 By Ralph Gates

There are many reasons why you may find yourself short on cash. Whether you are trying to consolidate your debt, or send a child to college, a cash-out refinance mortgage might be the answer. When you own a home, and you have built up equity, you can access the equity by applying for a cash-out refinance mortgage. It’s a great source of funds, and you can use the money as you need to without having to strain your current budget.

Understanding a Cash-Out Refinance

When you apply for a cash-out refinance mortgage, this takes your existing mortgage and turns it into a new mortgage. You are able to refinance your current mortgage while borrowing up to the value of the home. As long as you have equity in your home, you will be able to receive cash when you secure a cash-out refinance mortgage. You pay back the loan over time, just like your current mortgage.

Talk to your lender to learn more about what your specific options are when you are looking to cash out on the equity in your home.

The Benefits of a Cash-Out Refinance Mortgage

One of the biggest benefits of a cash-out refinance mortgage is that it will typically be at a lower interest rate than if you opened up a home equity line of credit (HELOC) or a home equity loan. Once you get the cash, you can use it to pay off credit cards and raise your credit score if that is one of your financial goals. If you are using some money for home improvements, you might be able to get a tax deduction. This is a question for your accountant when it comes time to do your taxes.

Pay Attention to the Details

Your home is the collateral for the new loan you are securing. Only borrow what you know you can afford to pay back, as you are at risk of losing your home if you are not able to pay the mortgage every month. As this is a new loan, the length of time you spend paying your mortgage may be lengthened. Look over the details and understand what your interest rate is before signing the paperwork.

Be Prepared for Fees

Be prepared to pay fees and other closing costs when you refinance your mortgage. Check to see if you will need to pay for PMI, as this is going to add to your monthly bill. Personal Mortgage Insurance, or PMI, is needed when you are borrowing more than 80% of the cost of the home. It can be dropped once you own 20% of the property.

A cash-out refinance gives you choices when you are looking for a way to come up with more cash. It’s the perfect solution when you are trying to pay for college, or you want to upgrade your existing home. If you need cash and have equity in your home, it’s time to talk with the team at Mid-America Mortgage to find out how you can secure a new mortgage.

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Filed Under: Our Tips

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Mid America Mortgage Services, Inc, NMLS #1142067
200 E Walnut St.
Columbia, MO 65203

Phone: (573) 875-1100

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"I’m a very loyal customer at Mid America Mortgage Services, Inc. I have an addiction to building houses and designing them, and they are always right there with me every step of the way helping me get the best loan product and the best rates whenever I am ready to build. They make sure you don’t get a loan that you can’t afford. The whole process was very smooth. I would recommend Mid America Mortgage Services, Inc to anyone because they are always there to teach you, help you, and make it easy for you every step of the way."

Kate

"When we were 18 and 19 years old no one wanted to help us get started. But Michelle took us under her wing 6 years ago next month. There is a lot of people out there that could of taken advantage of us many of times because we had no idea what was going on. For Michelle to stand beside us and walk us through, and not let us get into something that could get us in a lot of trouble means the world. We thank Michelle and we are extremely blessed to be able to work with her and her team. I have never even thought about talking to another lender and will always be loyal to Mid America Mortgage Services, Inc."

Cody and Morgan

Selling our home of 17 years and building a new home was a very emotional time for our family. We were ready for the next adventure in our lives but knew there were numerous steps involved. The search for a mortgage officer was simple, Michelle was our choice. Her guidance and knowledge made the process as easy as possible. When we had questions, she was always there to give us an answer and discuss our options. The employees of Mid America Mortgage Services, Inc like Michelle will keep us returning for our mortgage needs.

Chad and Julee

"One of the main things that I loved about Michelle was she was so organized. She would meet us at any location she needed to, and to be honest she had the absolute lowest interest rate. They were always very transparent with fees so there were no surprises. Michelle was always super easy and we would always run in talk to her even it was for a few minutes. The best thing was the process was very, very smooth."

Chris and Jamie

"They really explained the process to us very well and made us feel very comfortable, specifically Jeanie Byland. I have never asked a question that I felt dumb about. They really wanted to educate us and have been fantastic. The interest rates changed one day and they called me to say, ‘Hey we might ought to look into refinancing your loan’. I really felt like they had our best interest at heart."

Steve

Michelle, I want to thank you for all of your efforts on the loan. I never knew how much information the needed! I appreciate your personal nature and ease of working together. Thank you for making this happen! :)

Amy

"My family owns Tiger Ice Company. My experience with Ralph at Mid America started with Tiger Ice because we needed to expand our facility. When we went in to talk to Ralph at Mid America, he pretty much was straight up with us and told us we needed to go back to the drawing board. We came back with new numbers and a new plan, and we built the facility and everything was fine. Our dream of that would not have been possible at all without Mid America Mortgage Services, Inc and Ralph. They don’t tell you what you want to hear, they tell you the truth and that's what we weren't getting from other banks."

Andy

"My wife and I have moved around quite a bit with my job so we have been through the process before, but we have never had anybody help us as much as Michelle West Mid America Mortgage Services, Inc did. We needed a loan for a new construction home and they were able to help us out with all of our needs and make us feel comfortable with what we were doing moving forward. They did a good job of walking us through the paperwork to make sure that we were pre-approved for a certain amount."

Jason

"I knew Jeanie Byland for a long time. She made the process so easy. One of the things I probably appreciated the most was that she didn't want to spoil the excitement of closing on a new house by showing up on closing day finding out that we owe a lot more than we thought. They were upfront with that information right from the get-go, and that’s because it’s just like they say, ‘They wouldn’t put you in a loan that they would be comfortable taking themselves.’”

Jamie

"I have had mortgages since 2004 in Columbia and have gone through a couple of banks, but over the last several years, the last couple of houses have been with Mid America Mortgage Services, Inc. Michelle has told us many times, 'I am not going to put you in a situation I am not comfortable with you being in, regardless of what it means for our company'.

Heidi always has a smile on her face and when you walk through the door, they recognize you and say “Hi”. I definitely recommend anyone who is in the home buying, purchasing, refinancing, upgrading business to go to Mid America Mortgage Services, Inc, ask for Michelle because they are going to be the best person you can work with."

John


Phone: (573) 875-1100
200 E Walnut St, Columbia, MO 65203

 

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