Getting cash from the equity in your home: Here’s what to consider when doing a cash-out refinance

Those who own a home in the Denver metro marketplace are benefiting from the real estate market, specifically in the rapid increase in equity you’ve no doubt seen in your real estate. That, combined with extremely low-interest rates, no doubt you have considered whether to refinance. However, is it a good idea to refinance AND get cash out? Here are a few things to think about if you’ve been considering this option.

“There’s never been a better time in Denver for a cash-out refinance because of a unique combination of increasing equity and low rates in today’s market,” explains Dave Landin, owner of Denver-based The Mortgage Co. “We’ve been able to help hundreds of borrowers this year, allowing them to utilize additional capital without necessarily increasing their monthly payment. It’s been a win for people all around.”

What is a cash-out refinance, exactly?

A cash-out refinance is simply a way to borrow against the value of your home — usually a person’s biggest asset — to secure additional capital.

When is this a good option?

In essence, a cash-out refinance takes the balance of your existing mortgage and allows you to request additional funds beyond that (versus a traditional refinance, which matches the balance of the mortgage). The additional money can be used for various things, including home improvements (maybe that kitchen upgrade you’ve been dreaming about!), debt consolidation, purchase of new real estate, and more.

Depending on when you closed on your existing mortgage, you could also reap the benefit of a lower rate and payment, as well as potential tax benefits. Because every situation is unique, it is recommended that you speak to a loan officer about your specific needs so that you can fully understand if this is a good option for you.

Sounds like “free money”! Why would anyone NOT do this?

As with anything that sounds too good to be true, there can be cons to a cash-out refi. Specifically given that your home acts as collateral for any mortgage, that needs to be a consideration as you increase your balance to get cash out.

Additionally, whatever new terms are applied to your new mortgage are a consideration. Your loan officer should be a trustworthy source of information and lay out how a new interest rate, the new length, and the closing costs or other fees will affect the mortgage overall. It’s important to know that the new loan is worth the benefits you’re looking to glean.

Who can help me?

At The Mortgage Co., we have a stellar reputation for honest, trustworthy loan officers who can explain the pros and cons for your specific situation, make the process extremely smooth (even easy!), and who are simply fun people to work with. To talk to someone at The Mortgage Co. about any type of loan, including a cash-out refinance, contact us here or call 800.713.4047.