When people refinance their homes, they usually do so to either shorten the term or lower their interest rate. This can save a considerable amount of money, but another form of refinancing can actually put
cash in the borrower’s pocket. Cash-out refinancing is a trick where the original mortgage is replaced with a larger one: more than the house or condo is actually worth. The bank cuts the debtor a check and both parties emerge satisfied. Most lenders will not issue a cash-out refinance without at least one year of payments on the loan, for the sake of security.
Of course, this will result in more money spent down the road, but for a quick infusion a cash-out refinance is an easy way to capitalize on a home’s value. Depending on how much is needed, borrowers may add $20,000, $50,000 or even $100,000 to their mortgages. These sums can pay for a college education or unexpected medical emergency. Others use it to pay off credit cards and other loans, as a means of consolidating debt. If the mortgage is adjusted at the same time, payments may not even rise after a cash-out refinance, though the term will be extended.
Common Sense Mortgage Group, Inc professionals are more than capable of handling a cash-out refinance for customers and will do everything possible to secure an advantageous new loan at minimal additional cost for residents of the Los Angeles area.