When homeowners need cash, a cash out refinance is often their most economical option. With interest rates at near historic lows, there has never been a better time to access the equity in your home. Mortgage interest rates are much lower than credit card and personal loan rates, making a cash out refinance far more attractive. In many cases, there are also tax advantages.
Repayment on a mortgage cash out loan can also be spread out over long periods, freeing up cash in your budget. A mortgage cash out loan also reflects better on your credit report than credit cards and other loan instruments. With a mortgage refinance cash out loan, you avoid using up a high portion of your available credit, which helps your credit score.
Many homeowners are unaware that cash out refinance loans are available for non-conforming jumbo mortgages. Fannie Mae and Freddie Mac consider jumbo loans non-conforming because they exceed $453,100. Because of the larger values of homes financed with jumbo mortgages, jumbo loan refinances offer much greater cash out benefits than non-conforming loans.
How does a jumbo loan cash out refinance work?
In a jumbo loan refinance, the borrower refinances their home into a loan that includes the cash out amount. For example, a borrower may owe $500,000 on a home valued at $700,000 and wish to take out $100,000 of the equity in cash. At the closing of the refinance loan, the borrower would receive a check for $100,000 and the balance on the new loan would be $600,000, plus any applicable fees.
How do borrowers benefit from cash out jumbo refinances?
Cash out loans allow homeowners to tap into their home equity without having to sell their homes. Though homes are the greatest wealth builder for many Americans, having this wealth locked up in a residence can force homeowners to forgo financial opportunities. A cash out refinance allows homeowners to seize on those opportunities right away. Also, because selling a home and moving incurs substantial costs and potential capital gains taxes, accessing home equity through a cash out refinance often costs substantially less.
A jumbo cash out refinance provides the perfect solution for consolidating debt. Many borrowers use the cash to pay off high-interest debt. This strategy often saves borrowers hundreds of dollars every month.
The cash-out proceeds can also be used for home improvement, to purchase a car, or even to start a business. Home equity provides homeowners with a significant asset and cash-out refinance loans provide the method for accessing equity.
To get the best jumbo loan refinance for your situation, working with skilled mortgage professionals is crucial. Our mortgage experts will analyze your financial situation in light of your goals and formulate the most advantageous loan proposal. We make the process easy and even take care of all the paperwork. To find out if you qualify for a jumbo loan cash out refinance, give our loan consultants a call today.