Home Equity 101: What to Know About Cash-Out Refinancing
Thinking about putting your home’s value to work for you? Let’s chat about cash-out refinancing – a way many homeowners access the equity they’ve built up over the years.
What Exactly Is Cash-Out Refinancing?
Simply put, it’s replacing your current mortgage with a new one that includes the total amount you want to receive as cash. Unlike a traditional refinance that just adjusts your terms, with a cash out refinance you walk away with funds you can use right away.
Understanding Your Home’s Potential
Most homeowners can access up to 80% of their home’s current value, minus their existing mortgage balance. An appraisal of your home will be needed to determine your home’s current market value that will factor into how much you could potentially access.
The Financial Considerations
Cash-out refinances typically have closing costs, which are often wrapped up into the loan term payments. This is common with refinances in general, so understanding how those costs weigh against the value of getting access to your home’s equity is something homeowners should consider when deciding how much to borrow.
The Tax Perspective
It’s worth noting that tax regulations regarding mortgage interest have evolved. In many cases, interest on cash-out funds is only tax-deductible when used for qualifying home improvements. You should check with your tax preparer for the latest tax advantages when spending funds from a cash out refinance.
Intelliloan does not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only.
Making Your Equity Work Purposefully
Many homeowners leverage their equity for:
- Home renovations that add value
- Consolidating other debts
- Educational investments
- Important family needs
Understanding all aspects of your decision ensures you’re making choices aligned with your long-term financial wellbeing.
Have questions about your specific situation? The Intelliloan team is here to help you navigate your options.
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