Today we are going to discuss, “what is a cash out refi and is it the best move for you? Need cash and own a home? A cash out refinance might be the answer. It’s a way to take money out of your home’s value without selling it.
How does it work?
Here’s how it works. Let’s say your home is worth $300,000, and you only owe $200,000 on your mortgage. A cash out refi lets you replace that old loan with a new one—maybe for $250,000. You pay off the $200,000 you owe, and the extra $50,000 goes to you in cash.
What can you use the money for?
People use that cash for all kinds of things—fixing up the house, paying off credit cards, or starting a business. It can be a smart move if the new loan has a lower rate or helps you clean up high-interest debt.
Is this the right move?
But is it right for you? That depends. You’re trading home equity for cash. That means you’ll owe more on your home again, and your monthly payment might go up.
Here’s a quick example:
- Old loan: $200,000 at 4%
- New loan: $250,000 at 6.5%
Even though you’re getting $50,000 cash, your payment could jump by hundreds per month.
A cash out refi can work well—but only if the math makes sense. In the full article, we’ll walk through when it’s a smart move and when it could backfire. Let’s make sure you’re getting ahead, not falling behind.
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Is a cash out refi the best move for you? Contact us today to find out more.
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