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A Fresh Start for Family Finances in 2005
While 40% to 50% of us make New Year's resolutions on January 1–a ritual that has existed since ancient times–approximately 60% to 80% of us have already broken them by the end of February, according to researchers. It's still not too late, ...
Finances for the Freelancer
Budgeting and financial planning are great ideas, but how in the world do you budget or plan when you don't know from one month to the next how much money you're going to earn? You have months at a time when you earn very little money, and then during ...
Managing Finances As A Couple - What Is Best
You may find it difficult to manage finances together when you've been acustom to managing your finances alone. But when you become part of a couple, many things change, and your finances are no exception! Some couples take the traditional path of ...
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A cash out refinance mortgage loan is a great option if you have accrued a lot of equity in your home. If you owe $75,000 on a home that is worth $125,000, you could refinance the amount you owe and take up to $50,000 in a cash loan against the equity in your house. The money can be used to consolidate debts, do a remodeling project, or even invest. As great as a cash out refinance can be, there are a few things to think about before you decide to take out this type of loan.
How high are the fees to refinance?
Taking out a home equity loan usually costs less in fees than a refinance. Refinancing your home can cost you quite a bit when you consider higher loan fees and the possibility of points. If you already have a good interest rate on your loan, refinancing so that you can get a cash out option, might mean paying a higher interest rate on a new loan. In that situation, you might want to consider taking out a home equity loan instead of a cash out refinance mortgage loan.
How fast do you need the money?
When you take out a home equity loan, it takes less time to see your money. Often, it only takes 5 days to close. Cash out refinance mortgage loans can take a lot longer, so if you need the money immediately, it probably isn't the best option.
Protect yourself from scam artists.
There are lenders that practice something called loan flipping. They convince you to refinance your house, taking out a bit of equity for a project or two. A few months later they approach you to refinance again, convincing you to take out more cash from the equity in your house. Their scheme is to keep having you refinance, tacking on large fees and possibly increasing your interest rate until you are so far in debt that you end up losing your house. This particular scam has been played against many elderly homeowners with devastating results.
Taking cash against the equity in your house can be a wise move, but always compare taking a cash out refinance mortgage loan against the option of taking out a home equity loan and choose the plan that is best for you.
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