Can a Cash-Out Refinance Help You Meet Your New Year’s Goals?

Thursday, March 6, 2014, 1:00 AM | Leave Comment

It’s a whole New Year, and that means New Year’s resolutions! But while some people are content to stick to traditional resolutions like cutting out junk food or spending more time at the gym, there are others have their sights set on a much bigger financial game for 2014 — namely, doing what it takes to get a home loan and/or bringing down their high interest payments.

And more and more people are discovering the benefits that cash-out refinances can bring to the table.

Can a Cash-Out Refinance Help You Meet Your New Year's Goals

Generally, if you’re asking about cash out refis, chances are pretty good that you already have a fair amount of equity built up in your home and are interested in turning some of that equity into cash money.

If that sounds like something you’re interested in pursuing, read on.

  • So just what is a cash-out refinance?

    A cash-out refinance involves taking out a whole new home loan for a higher amount than what you actually owe on your current home loan, and receiving the difference in cash.

    So, say you have a home worth $400,000 that you currently owe $300,000 on.

    If you decide to go with a cash-out refi, you could receive a portion of the $100,000 in your home’s in actual cash.

    If you wanted to take out $20,000 in cash, that amount would then be added onto the principal of your new loan, so don’t be too generous to yourself when deciding how much to take out.

    You can choose your loan options – your refinance loan can be a fixed rate or variable rate.

  • When should I use a cash out refi?

    Cash out refis may be good for a number of situations, including:

    • When you need the money for a large purchase or investment but are unable to acquire it through any other means
    • Debt consolidation and lowering your total monthly interest payments
    • When other financing options are much more expensive than the rate offered by cash out refinancing
  • What can I use that money for?

    Anything you want; it’s your money, after all. But we do caution that you use it wisely – not frivolously, like on a new luxury car or European vacation, because after all, you will be paying it back.

    Most people take the opportunity to pay off any high-interest credit card debts they may have. This can be great for paying off any outstanding debts they may have which incur much higher monthly interest fees, freeing up their finances just a little bit more each month.

    You can also use the extra cash as an investment or towards a major purchase. Many people have used their equity monies for things like school loans, paying off emergency expenses or home improvement projects.

    Just remember – a cash-out refi isn’t like winning money from a slot machine – you will have to repay it, but hopefully at a lower interest rate than you’d have gotten from any other type of loan. Talk with your financial advisor or a mortgage specialist before committing to a new home loan.

About the author

Intelliloan™ ( is a direct mortgage lender based in Irvine, California and established in 1993. Intelliloan™ is approved by HUD, FHA and FNMA, and is licensed in 18 states.

An Equal Housing Lender, Intelliloan has been a member of the Better Business Bureau since 1999 and has an A+ rating. NMLS #3290.

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