With interest rates still near all-time lows and home values rising, the cash-out refinance is back! There are several reasons to consider cash out refinance…
1. Home Improvement Projects
Adding a master bedroom suite to your home could cost $100,000 or more; remodeling a kitchen could run $60,000 or more; and, remodeling a bathroom may be $50,000 or more as well. Even “small” projects can carry a price tag of $20,000 — think of a roof replacement, for example.
2. Pay off high interest rate credit card debt
Most credit card debt carry double digit interest rates and you can’t deduct the interest from your taxable income, like a mortgage. And the monthly savings in payments can be substantial. It is not unusual to have $400-500/ mo. in savings.
3. Fund a 529 Plan
Taking steps now to begin paying for college expenses is one of the most important steps you can take.
4. Buy an Investment Property
Generating cash flow from investment properties is a great way to supplement income and increase assets.
5. Buy a Second Home
With as little as 10% down, you can purchase a vacation spot for your family. No booking hassles, no sky-high hotel prices. Today’s home values are high, making it easier to raise enough down payment cash to buy a second home.
For most people cashing out of a home is a way to diversify and protect against another real-estate crash. It’s one thing to say the value of my home is x but it is another to actually get it. When values rise as they have been, it’s easier to get the cash out. When values correct and start to decline or worse, crash all the equity is wiped out. Now may be a good time to diversify.