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By
Carrie Reeder
There are some definite benefits to doing a cash out refinance. Just make sure
that overall you are not going to be spending more money in fees and interest
doing a cash out refinance as opposed to a home equity loan. When you do a
cash out refinance, you are refinancing your entire loan. Let`s say you owe
$300,000 on your home and you want to get $10,000 in cash out. If in
refinancing your rate will be the same or higher, then you will be losing an
extraordinary amount of money in fees just to get a $10,000 loan. In a case
like that, you would definitely want to go with a home equity loan.
Home equity loans are better if:
You have a large home loan yet only need to cash out of a small amount of
equity
You need to borrow up to 100% of the equity in your home
You want a revolving credit line
You want a payoff sooner, or longer than the term of the rest of your mortgage
loan
On the other hand if you are:
Going to refinance anyway
Wanting to borrow a large percentage of your home’s equity
Refinancing for a much lower rate
Then, a cash out refinance loan may be best for you. Of course, the best way
to tell is to actually sit down and do the math. These are just guidelines;
the real test is in the math. You can consult a refinance calculator and a
home equity loan calculator and figure out which one will save you the most
money in the long run. Compare the total amounts you will spend in interest
and fees. If you are planning on a cash out refinance, make sure that you are
refinancing with a low enough rate to justify the fees to refinance. Your
loan specialist should be able to help you figure out which one is best for
your needs.
For a list of recommended Refinance Lenders or if you would like to use a
mortgage calculator to help you compare a home equity or refinance loan for
your cash needs, click here: www.abcloanguide.com/refinance.shtml (http://www.
abcloanguide.com/refinance.shtml)
Carrie Reeder is the owner of www.abcloanguide.com (http://www.abcloanguide.
com). ABC Loan Guide is an informational loan website with informative
articles and it has recommended lenders to help you get the best mortgage
service possible.
carrie@abcloanguide.com (mailto:carrie@abcloanguide.com)
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