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[MoreMore Insights] What is Cash-Out Refinance?



What Is Cash-Out Refinance?


If your property price went up recently, you can apply for a cash-out refinance to replace your existing loan. The new loan will have higher limit, and you can use the extra funds from the cash-out refinance to pay for the new property deposit, or home improvements.


How Does Cash-Out Refinance Work?


The overall process of a cash-out refinance is the same as any other home loan refinance. Generally, based on the valuation of the property, you could work out how much equity you hold and how much cash out you could have. Secondly, figure out why you need the cash and what your plans are. Thirdly, do a finance health check, and compare different bank's home loans so that you might want to speak to your broker for advice. Finally, you could then apply for your new mortgage.




Benefits Of Cash-Out Refinance


Firstly, cash-out refinance allows you to use the equity you’ve already earned to fund home improvements. Secondly, if you are using the cash out to pay the deposit of new investment property, then the cash out will help you to secure the property that you like. Thirdly, cash-out refinance can give you the money you need to pay down and consolidate your debt, and lower your interest rate at the same time. Many banks are also offering cash back for refinances.


Drawbacks Of Cash-Out Refinance


When you do a cash-out refinance, you pay off your original mortgage and replace it with a bigger loan. This means your new loan may take longer to pay off. Your monthly payments and your interest rate may change as well. And also there are other costs involved too, such as application fees, discharge fees, and valuation fees, etc.


Is It Right For You?


There are many reasons for homeowners to apply for cash-out refinance, including investment purposes, debt consolidation, and home renovation. So cash-out refinance may be a good choice for you too.


Questions about cash-out refinance? Talk to professional mortgage brokers at More More Finance.

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