When your property value is worth more than the balance of your loan, you have equity. A "cash-out refinance" basically uses the equity you have established and allows for you to use it as money for various objectives. Typically you are allowed to refinance up to 75%, (sometimes 80%), of the value of the property on loans up to $214,600 whereas on loans above $214,600 you are limited to 70% of the property's value. Many people take cash out of equity to consolidate debt, buy cars and pay for purchases unrelated to real estate. There is a danger in this approach however, since the loan may outlast the item that was purchased. It does make sense when the underlying asset has a similar expected life as the loan. Making improvements to your property or purchasing a second home are examples of when cash out refinancing is advantageous. Should you have any questions regarding any of our services, please feel free to call us at
1-909-884-0584 or email us at mdisois@gte.net
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