The holidays are upon us and with both Black Friday and Cyber Monday in our rear view mirrors, many Americans are looking forward to the holidays and looking anxiously at their bank accounts. An average American will spend upwards of $700 on Holiday gifts alone which leaves many of us scrambling to put money in the bank or pay off holiday credit cards.
If you’re in need of some cash, perhaps you can turn to your mortgage for help!
Refinance Your Mortgage
Refinancing has tons of benefits to borrowers. Everything from lowered payments, lowered interest, and even some extra cash or a line of credit can be had from a simple refinancing. Generally speaking, many homeowners seek to refinance to either lower their interest rates, consolidate debts, or even glean cash or credit for much needed updates or repairs to their home.
With so many options, though, how do you choose how to refinance?
Refinancing for a Shorter Term
One reason many homeowners seek to refinance is to pay off their home entirely and in a short amount of time. If you’re like a typical borrower, your initial mortgage term was 20 or 30 years and likely has a higher interest rate than the market today.
Over a decade or two, though, things change. You likely have a better job or higher income, maybe you’ve paid off the car, and maybe your nest is finally empty and you have the extra cash flow to pay down your debt. Refinancing to a new mortgage with an accelerated term can help you pay off your house and give you more cash for future endeavors.
Take a Break
If you structure your refinancing right, you may actually end up with a month or two of no payments as the transaction crosses over from your current lender to your new one. You may remember the lag time from closing to your first mortgage payment on your current home, and it likely saved you at least a month of rents.
Time it all right, and you may very well be able to stash away a month (or two’s) worth of mortgage payments or put that money towards other things. Bear in mind, that if you choose to refinance the time of the month you sign will have a significant impact on when your first “new” mortgage payment is due. Talk to your lender to find out what the best time to sign is.
One of the more popular mortgage refinancing instruments in the market today is the cash-out refi. For many homeowners, cash-out refis are a great way to finance a remodel, purchase new appliances, or make general updates to an older home but the cash you take out can be used for virtually anything include consolidating debt.
In short, a cash-out refi pays out a lump sum which is first used to pay off your current mortgage and any taxes or fees associated with it and the rest is essentially yours to keep. Of course, you’ll have different terms, interest, and a new amortization schedule, so it’s important to talk to your lender about the effects of a cash-out refi.
Talk to Your Lender
We’ve already mentioned it, but it goes without saying. Talk to your lender about refinancing options and let them help you find the right solution for you. Looking for a lender or want to speak to a professional right away? Get in touch with Tidewater Mortgage Services Inc. and fill out a quick online application to get started today with your new refi!