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Refinancing is replacing your current loan by paying it off with a new loan, and there are many reasons to consider refinancing. Before you do so, it is important to decide if the benefits outweigh the cost of the new loan. In particular, take a look at current rates, your current financial needs, and the fees associated with refinancing. With some due diligence, refinancing can be beneficial for any of the following reasons:
When it comes to looking at money you owe, not all debt is created equal. While there are many shades of gray in life, there is absolutely good debt and bad debt. And the difference matters, whether you’re taking financial steps to buy a home or prepare for retirement. Let’s take a look at some of the distinctions between them.
We live in an automated world where you can buy groceries with the press of a button and apply for a mortgage online in minutes. The underwriting process can be nerve wracking for potential homeowners as they search for bank statements, credit card statements and pay stubs and submit them wondering if there is something hidden that will cause their mortgage application to be rejected. Underwriting is often an automated process – provide information and wait to find out if you’re approved or rejected. Sporadic income, bad credit or lack of credit history generally will negatively impact chances of getting a mortgage. Luckily, there’s a way to move beyond the automated process and put your loan application into the hands of a lender that understands your situation: manual underwriting.
It doesn’t matter whether you are getting ready to sell your home or refinance your existing mortgage; if you are working with a lender, they will likely require an estimate of the fair market value of your property. That means they will request an appraisal to find out how much your home is currently worth to help determine the loan amount you may qualify for.
If you find yourself wondering about cash-out refinances, you are not alone. Many people decide to get a cash-out refinance for reasons such as needing home improvements, helping pay for a child’s college tuition, or simply wanting a better rate while accessing the equity of one’s home. Below is what you can expect when getting a cash-out refinance.
A cash-out refinance allows you to access the equity in your home for extra cash if you have considerable equity in the home. For example, if your home is worth $250,000 and you still owe $150,000, you could take out a new loan for $180,000, pay off the existing loan amount and use the remaining $30,000 to consolidate credit card debt.
A Jumbo loan has a principal loan amount that is bigger than conforming loan limits. For 2018, the maximum conventional loan amount is $453,100 (ranging up to $679,650 in high-cost areas) for a single-family home.
Refinancing may save you money by lowering your monthly payment or reducing your loan term. However, if you aren’t careful it could end up costing you more in the long run. Here are some things to watch out for when refinancing:
Buying a home is often one of the biggest financial decisions in your life. It can also be nerve-racking, and you may have a lot of questions. Determining how much to spend on a home will most likely be at the top of your to-do list before you begin your search for a home.
If you have considerable equity in your home and need extra cash for major expenses, such as home improvements, starting a business, college tuition, or consolidating credit card debt, a cash-out refinance of your home could be an option.
