Mortgage rates are still near record lows as of April 2018, so it is a good time to refinance if you have a mortgage at a higher interest rate.
If you choose to do a cash loan by refinancing your house right now to get quick money for things you need, it could be a great thing for your financial situation.
Even for homeowners, money is not always this cheap, so talk to a mortgage lender and see if it makes sense to pursue a cash loan refinance.
Here are some of the benefits of doing an easy cash loan refinance loan right now:
#1 Rates Are Still Near Historic Lows
Do you like to pay less for your mortgage each month? Who doesn’t? Interest rates are still low and there is time left to get yourself a lower monthly payment.
However, you should take note: Rates have risen in the last several months as economic activity is increasing under a Trump presidency. As Trump is promising lower taxes, more infrastructure spending and less regulation, economic signs are pointing in a positive direction.
This means that rates are likely to rise in 2018, and if the Federal Reserve comes through with its promised rate hikes, we could see rates in the high 4’s this year.
Rates are still attractive. So getting a cash refinance loan today could save you big. You may have to pay a higher rate for a refinance or home equity loan for bad credit.
#2 Mortgage Interest is Tax Deductible
This is one of the major benefits of doing a cash out refinance. Not only are you getting a lower interest rate than most credit cards. In most instances, you are able to write off an additional thousands of dollars per year off of your taxes.
When you add up the money you are saving in payments each year with the money you are saving in taxes, refinancing usually makes a lot of sense. Of course you should consult with a tax adviser or the IRS to verify the potential tax deductions with cash loans, second mortgages and home equity credit lines.
#3 Home Prices Are Rising
If you own a home in most parts of the country, you are probably seeing appreciation. This means that you will have more equity to pull out of your home to when you refinance for easy cash loans.
Remember that the money that is tied up in your home is only on paper, however. If the market were to dip in a few years, you could lose much of that equity, or even all of it.
As long as home prices are going up, you should strongly consider pulling out the cash while you can.
If you have not had an appraisal in several years, you could be surprised by how much your home has gone up in value as of 2017. This could really come in handy when it comes to refinancing!
#4 Credit Card Rates Are Rising
One of the many disadvantages of having credit card debt is that in a rising interest rate environment, your credit card rates will also go up. If you have $10,000 in credit card debt, you are probably going to see a higher interest rate on that money before the end of the year.
As noted above, the Federal Reserve is expected to raise rates two more times in 2017. Barring something unforeseen, this will happen and will raise both mortgage and credit card interest rates.
#5 Education Costs Are Rising
If you have kids in college or preparing to go to college, you probably know that college tuition rates rise significantly each year.
If you are planning to pull cash out of your home to fund your child’s college education, you could be better off to do it as soon as you can before tuition costs go up any more.
#6 Great Time to Do Home Improvements
Economic activity is picking up. Homes are increasing in value. If you are thinking about selling your home down the road, you will want to make as much money as you can with your home.
This makes it a great time to do some of those home improvement projects you always have wanted to do.
If you take some of your equity out of your home and update the kitchen and/or the bathroom, this could add thousands of dollars to the value of your home when it comes time to sell.
All of these reasons make it a good time to consider a cash out loan refinance.
If you are thinking about pulling the trigger, you will need to follow some general lending guidelines, whether you are doing a conventional or an FHA cash out mortgage:
- Income: Just like when you qualified for your current loan, your lender must check your income to ensure you can repay the loan. You will need to provide two years of tax returns, a month or two of pay stubs, and a profit/loss statement if you are self-employed.
- Assets: Get print outs or PDFs of your bank and investment account statements.
- Appraisal: To see if you have equity in your property and how much the home has gone up in value, a new appraisal is needed.
- Credit: The credit score you need for a refinance will vary by the lender and by whether it is an FHA or conventional refinance. Most companies will want you to have at least a 640 score for FHA and a 680 for conventional.
- Payment history: You should not have any late payments on your mortgage for at least the last year, and it is better to have none at all.
If you have equity in your home and have decent credit, you really could benefit a lot by pulling cash out of your home now.
Rates are still very low, but there are signs they will go up substantially in the near future.
Also, home prices are rising nicely, but you never know how long that will last.
All in all, we recommend that you consider pulling out cash as soon as you can in early 2017 because once those rates have gone up, there is nothing you will be able to do for at least a few years.
Consider pulling out cash as soon as you can in early 2017 because once those rates have gone up, there is nothing you will be able to do for at least a few years.