Do you currently own a home and want to know more about refinancing your mortgage? You may want to consider a cash-out refinance, which is a mortgage that is taken from the equity in your home. If you are interested in refinancing your home in the areas of Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee, and want to know more about your cash-out refinance options, Foundation Mortgage can help. Contact us today to learn how you can benefit from this refinancing program.
Understanding a Cash-Out Refinance
As you make the mortgage payments for your home, the amount of equity in your home increases. With a cash-out refinance, you refinance your current home with a new mortgage that is a higher amount than what you owe, and you get to keep the difference. People who choose the option of a cash-out refinance usually use the excess money for home improvements or repairs, to pay off debts, or to subsidize other life expenses. When you apply for a cash-out refinance, you will be required to gather several documents and your current financial situation will be examined to ensure you can pay back the loan.
Advantages and Disadvantages of a Cash-Out Refinance
A cash-out refinance can be advantageous for many borrowers, however it may not be suitable for some. If you have a great deal of high interest debt, a cash-out refinance may help you pay off your debt more quickly. You may be able to refinance your home at a lower interest rate, and by using the refinance funds to make improvements and renovations to the home, you may be able to raise the value of your home and qualify for tax deductions. A downside of a cash-out refinance is that you will be required to pay closing costs on the new loan and it will extend the amount of time you will have to make mortgage payments.
Applying for a Cash-Out Refinance
When applying for a cash-out refinance, it is important to understand your credit score. Some other factors you will want to consider when applying for a cash-out refinance are:
- Lenders will ask you for income verification and other financial information, so it is important to have all the necessary documentation gathered
- Lenders will examine your loan-to-value, (LTV), and it cannot exceed 80% of your home’s value
- Lenders will review your credit score, with an ideal score being typically 620 or higher
Receive Assistance With a Cash-Out Refinance
If you have questions about refinancing your home with a cash-out refinance in Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee, contact Foundation Mortgage today. We will work with you to determine the best home refinancing option.