For most Texas homeowners, cash-out refinance become very popular. The common uses of it being for personal debt consolidation, a home improvement project or a luxurious vacation.
But what makes it popular?
Refinancing provides a way for you as the homeowner to access your house’s equity and spend all the extra cash on whatever you want. As long as you made your monthly payments, it’s quite easy to qualify, especially since you are already the owner of the property.
Pros of Cash-out Refinance
Aside from the big cash, you can get out of cash-out refinance. There are also a few benefits as to why Cash Out Refinance San Antonio is very popular nowadays.
It adds to your tax savings
Did you know that your mortgage interest is tax deductible? Apparently, it is. What this means is that you use your cashout to settle your debts which are considered as non-tax deductible. This will result in more tax savings in the future.
It helps you borrow at a more stable rate
Another benefit to cash out refinancing is its fix interest rates. Unlike the home equity lines of credit which has adjustable rates, you can count on the cash-out refinance fixed rates.
It may eliminate high-interest debt
It’s a lot of stress managing your debt and high monthly payments when it comes to consumer debts and credit cards. With cash-out refinance, you can convert all of these expensive debts of yours into one monthly payment. That way, you can say goodbye to all the high-interest debts that you have and start enjoying your money.
It enables your lifestyle and your future
A lot of people love the Texas neighborhood. It is after all that made them want to stay there in the first place. If you’re going to live there for the next five years, buy yourself a house and then choose cash-out refinance. Why let your cash wrapped up in your home?
Convert your home’s equity into cash for weddings, travel, investments, businesses, retirement, college, and other long term goals. Choose something that’s strategic and profitable. Decide on something that works for you and your current financial state.
Downsides of Cash-out Refinance
Aside from the benefits of cash-out refinance, it is also essential that you know its disadvantages.
This is the main downside of a cash-out refinance. You will need to pay the closing costs after your refinancing deal.
Private Mortgage Insurance (PMI)
You might be charged with private mortgage insurance if you owe more than 80% of your home’s value. However, if you are currently paying your PMI and your home’s value increased, you can look for lenders to check if you can remove your PMI.
New Loan Terms
When doing a cash-out refinance, your current mortgage terms will most likely change. You need to know these changes and double check if your new mortgage loan duration and any added costs before you sign any contract. This way, you know what you are getting yourself into.