There are many ways to access your home’s equity, such as a HELOC, home equity loan, and cash-out refinance. While many homeowners are familiar with a HELOC (real estate agents often push it), it’s not always the best option for homeowners. If you’re exploring your options, a cash-out refi might be a versatile solution.

Typically, homeowners associate a refinance with trying to earn a lower rate. However, cash-out refinancing goes beyond interest rates, offering a way to restructure your overall financial picture and health.

What is a Cash-Out Refinance?

A cash-out refinance replaces your existing mortgage with a new, larger loan so you can take the difference in cash. The amount you can access depends on your home’s equity and loan terms. In general, mortgage lenders allow you to borrow up to 80% of your home’s value.

What are the interest rates?

Unlike variable-rate loans like HELOCs, cash-out refinances have fixed interest rates. This means your monthly payment stays consistent – no surprises down the road. Plus, in some cases, the rate on your new mortgage could be lower than what you’re currently paying.

How much cash can I access?

The amount you can access depends on your home’s equity and loan terms. Typically, lenders allow you to borrow up to 80% of your home’s value.

A simple way for calculating cash-out refinance options is to take your home value x 80% and subtract your current mortgage balance. The result is your potential cash-out amount. Remember that this varies for everyone based on their specific situation, but that will give you a general idea of what you can refinance and cash out.

How do homeowners use the cash?

A money-out refinance isn’t just about pulling cash – it’s about smart financial moves. Here’s how homeowners often use their funds:

• Consolidating High-Interest Debt: Pay off credit cards, personal loans, or other high-interest accounts to save money in the long run.
• Major Life Events: Whether it’s a wedding, college expenses, or planning for a family, a cash-out refi can help you manage significant milestones.
• Home Improvements: Invest in renovations or upgrades to boost your home’s value (and quality of life!)

Is a cash-out refi right for you?

If you’re sitting on home equity, a cash-out refinance could be a game-changer. It’s all about calculating your needs and aligning them with your financial goals. Explore your options for accessing your equity and see how a refinance and cash out stacks up against alternatives like HELOCs. Your home’s equity isn’t just an asset – it’s an opportunity. Ready to get started?