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Home Mortgage Refinancing - Things To Consider When Looking To Get Cash Out On A Refinance
from: Carrie ReederWhen you refinance your home mortgage, lenders often tempt you with the option of cashing out part of your home’s equity. Cash at a comparably low interest rate may seem like a good option, but make sure you will financially benefit from it first.
Raising Your Home’s Value
Only some home improvements raise the value of your home. Bathroom and kitchen upgrades are one example of this. However, with most remodel jobs, you will not see a financial gain. If you are using your home’s equity to fund projects, make sure that your investment will pay off.
Saving On Interest Payments
Paying off credit cards with your home’s equity will save you money in two ways. First of all, you will save on interest payments. Secondly, the interest you pay on your mortgage is tax deductible, unlike credit card interest.
PMI Penalty
Private mortgage insurance kicks in if you borrow more than 80% of your home’s value. These extra payments can add up to several hundred dollars a year, so be careful how much you borrow. Other lines of credit may be more cost efficient when you factor in the cost of PMI on your mortgage.
The Length Of The Loan
While it may see smart to take out equity at a low interest rate with your mortgage, it may be cheaper to cash out through a home equity loan. Home equity loans allow you to deduct interest payments from your taxes, but they require a shorter repayment period.
Interest rates on a home equity loan are higher, so you will need to compare the costs between refinancing and a home equity loan. Generally, if your mortgage is long-term, a home equity loan is a better deal.
Your Financial Situation
To decide whether to cash out the equity of your home, you have to make decisions around what is best for your financial situation. There are no hard rules for this type of decision.
For example, purchasing a car with your home’s equity may be a wise investment if you need a car and would struggle with a car payment. In the end, financial decisions are about making trade-offs.
About the Author
Carrie Reeder is the owner http://www.abcloanguide.com, an informational website about various types of loans. To view our recommended sources for refinance mortgage loans online, visit
this page: http://www.abcloanguide.com/refinance.shtml
Refinancing Home Mortgage Loans Specific links
Refinancing Home Mortgage Loans News
A Rush Into Refinancing as Mortgage Rates Fall - New York Times
 ABC News | A Rush Into Refinancing as Mortgage Rates Fall New York Times, United States - By one account, the new program would be available only to home buyers, not to people who simply want to refinance their existing loan at a lower rate. ... Homeowners' Refinancing Jumps by Record Pace Lower mortgage rates no silver bullet Proposal could drop mortgage rates to 4.5 percent |
US MBA’s Mortgage Applications More Than Doubled Last Week - Bloomberg
 Post Chronicle | US MBA’s Mortgage Applications More Than Doubled Last Week Bloomberg - The Mortgage Bankers Association’s index of applications to purchase a home or refinance a loan jumped 112 percent to 857.7, the highest level since March, ... UPDATE 1-US mortgage applications post largest gain ever Mortgage applications more than double FINANCIAL STOCKS Bulls outlast bears in Wednesday grudge match |
Home equity loan avoids fees of refinancing mortgage - ABC15.com (KNXV-TV)
Home equity loan avoids fees of refinancing mortgage ABC15.com (KNXV-TV), AZ - Refinancing would cost thousands, which seems like an awful lot for a loan of only about $80000. What should I do? A. You might consider a home equity loan ... ARM with a long fixed-rate term gives homeowner time to plan |
FDIC's Bair warns investors fighting loan changes - The Associated Press
 CEP News | FDIC's Bair warns investors fighting loan changes The Associated Press - WASHINGTON (AP) — Investors in mortgage securities who are challenging home loan modification programs aimed at avoiding foreclosures could provoke a ... FDIC: Government idea won't help people in need US Mortgage Continues to Assist Homeowners During Mortgage Crises |
Bernanke Says US Must Step Up Foreclosure Efforts (Update1) - Bloomberg
 ABC News | Bernanke Says US Must Step Up Foreclosure Efforts (Update1) Bloomberg - The Fed chief outlined four possible options, including buying delinquent mortgages and providing bigger incentives for refinancing loans. ... Bernanke calls for measures to stem foreclosures Bernanke wants more action to curb foreclosures US Federal Reserve chairman calls for mortgage reform |
Cashing in on lower interest rates - Newsday
Cashing in on lower interest rates Newsday, NY - Home loan applications last week doubled despite the shortened workweek, the Mortgage Bankers Association said yesterday. Refinancing last week accounted ... Low rates breathe life into mortgage market |
Mortgage plan shows increased gov't role - Washington Post
CEP News | Mortgage plan shows increased gov't role Washington Post, United States - But other observers say the government has few options to keep money flowing to consumers who want to buy or refinance a home. "We don't have a choice," ... Bankrate: The Internet ReFi Play |
Refinancing a viable option for certain homeowners - Monitor
 stv.tv | Refinancing a viable option for certain homeowners Monitor, TX - Home prices in Hidalgo County fell on average 7 percent in the past year according to the Real Estate Center at Texas A&M University. A refinanced loan will ... How To Cope With The Flood Of Foreclosures? |
Lower mortgage rates help but jobs, prices key - Reuters
Lower mortgage rates help but jobs, prices key Reuters - A government plan to sop up hundreds of billions of mortgage securities spurred a bond rally that yanked 30-year home loan rates down half a percentage ... |
Geithner Seeks to Push FDIC’s Bair Out After Clashes (Update1) - Bloomberg
Geithner Seeks to Push FDIC’s Bair Out After Clashes (Update1) Bloomberg - Yesterday, an official said Paulson instead is considering a proposal to drive down home-loan rates through purchases of mortgage-backed securities. |