Cash Out

Cash Out

CASH OUT TODAY FOR A BETTER TOMORROW.

With a cash-out refinance, you use the equity you’ve built up in your home to get cash for other expenses. Tapping into your home’s equity is an ideal way to get extra money, and the beauty of a cash-out refi is you can use the cash for anything you choose. You could pay off debt from high-interest credit cards or student loans, make home improvements, or even start a new business. The only limitation is your imagination.

It’s important to note that when you refinance your existing mortgage to get cash-out, you’ll be subject to most of the same underwriting criteria as when you purchased your home. You may need to prove that you have a debt-to-income ratio that qualifies, or that you can afford to make higher monthly payments than you have now. In addition, you’ll likely need to provide supporting documentation that includes proof of income via W2s, 1099s, retirement statements, bank statements, and/or tax returns.

Read below to discover what cash-out refinance is all about, and how to get started with the application process through Embrace Home Loans.

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What are the benefits of a cash-out refi?

The biggest advantage to a cash-out refinance is the obvious one – cash! But there are also other reasons to consider this option. It’s possible to refinance your existing mortgage and get a rate that’s lower than if you opt for a line of credit. Also, because mortgage costs are sometimes tax deductible, there could be additional savings if you put the money you receive toward paying off debt.

Using funds from a cash-out refi to consolidate higher-interest loans and credit accounts can also lower your monthly payments in the short-term, and save you tons of interest in the long-term.

What are the costs of a cash-out refinance?

Much like if you’re simply refinancing your mortgage for a lower interest rate, there will be closing costs associated with a cash-out refinance, which on average will range between 3-6% of the total mortgage amount.

It’s important to carefully consider these closing costs when making a final decision whether a cash-out refinance makes financial sense for you, especially if you’re:

  • Planning on moving in the next few years, since you may not be in the house long enough to recoup them
  • Paying off other debt, since your potential savings on interest payments might not be worth the cost

HOW DO I KNOW IF A CASH-OUT REFI IS RIGHT FOR ME?

If you’re using the money to pay off other debts, and the total of all your monthly payments will be reduced, then it could make sense to do a cash-out refinance. It’s also smart to take advantage of a cash-out refi if you need money for large expenses such as college tuition, because mortgage rates are often lower than rates you could get on personal or student loans. In addition, mortgage interest could be tax deductible in some cases (but you’d need to check with a tax professional regarding your specific situation).

An Embrace mortgage specialist can help find the loan that’s right for you and guide you through the entire process step-by-step. And because we’re a direct lender, our refinance process is streamlined to help get you the cash you need fast.

Call Embrace today at 800-620-6292 to speak with one of our knowledgeable Loan Officers and learn more about your refinance options. Or, fill out our easy, convenient online application and one of our specialists will contact you as soon as possible.

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30 Year Fixed-Rate Refinance Mortgage Example:
The payment on a $225,000 30 year fixed-rate cash out refinance loan at 3.875% with a 70% loan-to-value (LTV) is $1058.04 with 2 points due at closing. The Annual Percentage Rate (APR) is 4.123%. This assumes a FICO score greater than 680. Payment does not include taxes and insurance premiums, which will result in a higher monthly payment. Interest rates and annual percentage rates (APRs) are based on current market rates and are subject to change without notice. Rates offered may be subject to pricing add-ons related to property type, loan amount, LTV, credit score and other variables. Mortgage insurance may be required for LTV >80%. If mortgage insurance is required, the mortgage insurance may increase the APR and the monthly payment. Stated rate may change or not be available at the time of loan commitment or lock-in.

30 Year Fixed-Rate Purchase Mortgage Example:
The payment on a $225,000 30 year fixed-rate purchase loan at 3.49% with a 70% loan-to-value (LTV) is $1,009.10 with 2 points due at closing. The Annual Percentage Rate (APR) is 3.733%. This assumes a FICO score greater than 700. Payment does not include taxes and insurance premiums, which will result in a higher monthly payment. Interest rates and annual percentage rates (APRs) are based on current market rates and are subject to change without notice. Rates offered may be subject to pricing add-ons related to property type, loan amount, LTV, credit score and other variables. Mortgage insurance may be required for LTV >80%. If mortgage insurance is required, the mortgage insurance may increase the APR and the monthly payment. Stated rate may change or not be available at the time of loan commitment or lock-in.