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 Sam
Site Admin
Joined: 21 May 2005
Posts: 281
Location: CALIFORNIA
117.49 Dollars($)
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 Posted: Thu Apr 01, 2004 4:14 am Post subject: Cash-Out Refinance |
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Cash out Refinancing is the process of taking a new mortgage loan greater than the unpaid balance of the existing mortgage, keeping the same property as security for the debt. Through this process a borrower can pay off the existing loan as well as utilize the extra cash for other purposes.
For example, suppose Kris took a mortgage loan of $1, 20,000 to purchase a house. He still owes $70,000. He also wants $25,000 as cash. So he takes a new mortgage loan of $95,000 with the same property as the collateral. This is known as cash out refinancing.
Features:
- One should choose cash out refinance mortgage only when the current market rate is lower than the interest rate on the existing mortgage.
- The loan amount in cash out refinancing exceeds the amount of existing mortgage that is left to be paid.
- A borrower has to pay for the closing costs associated with cash out refinance loan.
- The interest on cash out refinance loan is tax-deductible, so it prevents a borrower from paying extra taxes.
Benefits:
- Cash out refinancing helps to generate cash from home equity and then use the extra cash for home repairs and paying off other debts.
- One can also shift from an adjustable rate mortgage to a fixed rate mortgage and vice-versa but this depends on how much a borrower can save due to prevailing market rates.
Related Reading
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Andre'
Guest
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| Posted: Wed Mar 18, 2009 5:12 am Post subject: Fees at Closing |
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| Are the LTV/Indicator Score Fee and the Cash Out Refinancing Fee, two fees that have to be charged to the borrower or are these fees just a new way for banks to make money? These fees will add a combined 1.875% of loan amount to the closing cost on people with A Credit. |
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gmakerley
Community Mentor
Joined: 09 Nov 2007
Posts: 7405
Location: bloomfield, ct
62.63 Dollars($)
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| Posted: Wed Mar 18, 2009 7:00 am Post subject: |
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andre, i have never heard of "ltv/indicator score fee" nor "cash out refinancing fee."
what kind of lender are you dealing with?
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George M. Akerley
Loan Consultant
860-221-5044 |
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eric1
Community Experts
Joined: 04 Jan 2009
Posts: 1172
175.80 Dollars($)
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