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Cash Out Refinance May Be Right for Renovations

Customers come in on a regular basis asking about the availability and advisability of cash out refinancing.  In many cases, they know that they'll be in their homes for at least three or more years, and they hope to see a return of some of the equity lost in the last three years.  They have equity, and want to remodel for a couple of reasons.  Since they'll be in the home for a while, they want to enjoy it more, with a more modern kitchen or an additional bathroom.  Also, they expect these renovations to add value to the home when they are ready to sell.

The questions most often asked include comparing a HELOC, Home Equity Line of Credit, to a cash out refinance, as well as if it's a good idea to add to their loan balance in today's economic situation.  Well, no arguments seem to be coming from anyone about the amazing historically rock bottom interest rates for mortgages.  HELOC loans typically carry higher interest rates, sometimes by a couple of percent or more, as they don't hold a first lien position.  A refinance at today's really low rates might even allow keeping the mortgage shorter.  One couple had 23 years left on their current mortgage, were able to take out $30,000 for home improvements, and they were able to refinance a 20 year fixed rate loan at a lower payment, and their out of pocket interest was comparable.

There are several factors to balance in this decision, and that's our specialty.  Don't hesitate to come in and ask about options, as there are refinancing opportunities available.  If you can enjoy your home more now, sell it for more later, and maybe reduce your payments as well, it's definitely worth a visit and evaluation

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