Pro’s And Con’s Of Cash Out Refinances

Cash out refinances can be beneficial if you have accumulated equity in your home. There are things to consider when thinking about the idea. Here are the pros and cons of cash out refinances:

Cash-Out Refinance Pros:

Access to Equity: Cash-out refi’s allow you to draw on the equity that has grown in your house to get cash for other costs like debt reduction, home renovations, or other investments.

Lower Interest Rates: A cash-out refinance could result in lower monthly payments and overall interest charges if interest rates have declined since you first took out your mortgage. Of course, that is unlikely in today’s environment as interest rates had been at all time lows until last year. 

Consolidate Debts: By consolidating several debts into a single monthly payment, you can streamline your finances and make budgeting simpler.

Drawbacks to Cash-Out Refinancing

Higher Loan-to-Value Ratio: Your loan-to-value (LTV) ratio, which measures how much debt you have in relation to the value of your house, may rise as a result of a cash-out refinance. This may increase the price of mortgage insurance or make it more difficult to refinance in the future.

Increased Costs: Due to higher closing costs, appraisal fees, and other expenses, a cash-out refinance may be more expensive than a regular refinance.

Longer Loan Term: A cash-out refinance may lengthen the term of your loan, which would require you to make payments over a longer time period and accrue higher interest overall the life of the loan.

The possibility of foreclosure exists if you are unable to make the required monthly payments on your cash-out refinance.

If you have questions about a property you are thinking about selling, or just questions in general, visit us at or give us a call at 504 264 1407

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