After a busy summer, the real estate market has shown some signs of moderation, but not by much.
Median home prices continue to move up notch after notch. Meanwhile, the pace of home sales bounced back following a minor slump at the end of summer. In short, the market continues to boom.
What’s happening is a supply and demand imbalance. Too many buyers, not enough sellers is the recurring theme. Homes still selling above the asking price is yet another illustration of the ongoing market dynamic of increasing home prices and home equity.
Due to the general upward trend of home prices, more homeowners may wonder if they should enter the real estate frenzy while the iron is hot. While selling in today’s market isn’t for everyone, there is still an opportunity to seize the moment through a cash-out refinance.
As a bonus, today’s interest rates may benefit homeowners with positive equity.
This is that rare moment when a homeowner is at the precipice of something special with the combination of growing home equity and the availability of possibly a lower interest rate than the one they have.
Cash-Out Refinance, Explained
A cash-out refinance is when you swap out your current loan for a new one. With the previous loan paid off, it can be replaced by a new borrowing arrangement with a lower interest rate. Homeowners can also borrow more than what they owe on the home with equity on their side.
A cash-out refinance is empowering because homeowners can borrow a large amount of money at an affordable rate, an opportunity that’s not likely doable without the power of equity.
From home repairs, renovation, or debt consolidation, a cash-out refinance program efficiently addresses a wide range of financial puzzles.
Let’s dive a little more into the details and put the benefits of a new home loan through a cash-out refinance into focus.
Reinvest in home improvements
When homeowners put money back into their homes using a cash-out refinance by renovating or making repairs, they are also reinvesting.
Certain home improvement projects will have greater value than others. For instance, boosting your home’s insulation has some serious return on investment value. So, homeowners should create a balance and prioritize home improvement projects that get the biggest bang for the buck.
While a refinance can provide an instant cash boost, it can also be used to shorten the life of the loan. As a result, homeowners are cutting the payoff period short, and therefore, they are saving. With today’s rates, the savings could be substantial.
Depending on the homeowners’ priorities, it’s entirely possible for them to both lower their monthly payments and cut down the life of the loan for greater savings.
Based on how much equity the home has accumulated, homeowners have a unique opportunity to walk away with a serious amount of cash.
Whether it’s used for financing a college education or paying for a major life purchase, homeowners can reshape their lives with more financial flexibility.
Freedom from high-interest debt
One of the greatest accomplishments in life is being debt-free. Imagine living in a world in which auto-payments for college, credit card and medical bills are permanently turned off. It’s possible with a cash-out refinance loan.
Average credit cards charge over 15 percent on APR, which is an expensive way to borrow money.
When homeowners consolidate their debt through a cash-out refinance, they are ensuring that they will pay the least possible amount for financing their old and future debts.
Better credit score
It may come as a surprise, but paying off debt through consolidation may have a positive impact on a homeowner’s credit standing.
Simply put, by paying off credit debts, borrowers can reduce their credit utilization and therefore potentially improve their credit scores at the same time.
The cash-out refinance benefits are a steadying force. Homeowners can maximize their market position and enjoy new financial freedoms and new achievements. No one really knows how much longer this window of opportunity will last, but what’s clear is that today’s homeowner has a direct path toward new savings and new possibilities.
Please do not hesitate to contact me for any questions about a cash-out refinance. Email me at ky[email protected] or give me a call at 916.880.8059!
With nearly a decade of experience in the mortgage and real estate industries, I have a strong understanding of how to evaluate an individual’s situation and determine how to best meet their goals. My approach for California, Nevada, and Colorado current or future homeowners is to educate, advise and deliver a top-notch customer experience.
I’m committed to working for my clients as their mortgage expert, advocate, and partner in their journey toward purchasing or refinancing a home.