Sometimes, refinancing your mortgage can really save you money.
You may be able to pay less interest, lower your monthly
payment, or convert from a 30-year loan to a 15-year loan (and
build your equity faster!). But be sure that refinancing is
right for you.
DRAW ON EQUITY
If you're looking to tap into the equity you've built in your
home, you may consider a cash-out refinance. With this option
you receive cash at closing. Homeowners generally choose this
type of refinancing to pay for their children's education, home
improvements, debt consolidation, or other needs.
A lender will typically require a homeowner to have at least
five percent equity accumulated in the property for this type of
refinancing. Equity is the difference between what the property
is worth and the amount still owed on the mortgage. For example,
if the house is valued at $100,000 and the mortgage balance is
$90,000, the equity is $10,000 (10 percent of house value).
If you are considering a cash-out refinance for the added
flexibility it may provide in helping you manage your expenses,
first consider whether you will be getting your debt under
control or increasing it
