Arizona Cash-Out Refinancing

There’s two basic reasons why people refinance their mortgage:
  1. to decrease the amount of money they pay
  2. to walk away with cash in hand

Saving Money Through Rate and Term Refinancing:

Homeowners refinance their loan so they save money – either by getting a lower interest rate or by decreasing the term (length) of the loan. The ultimate goal is to save money. An example: you purchased a home when the economy was doing well and the interest rate on the mortgage was 4%. As the years go by and the economy changes, the interest rate decreased to 3%. You refinance your mortgage to lower the interest rate and save money.

Getting Money Through Cashout Refinancing:

The main goal here is for the homeowner to access cash by refinancing their existing home loan to an even bigger loan. Cashout refinancing may (or may not) result in a lower interest rate or a shorter term, but the important point here is that the homeowner access cash by borrowing against the value of the home.

Why would a person refinance their mortgage to an even larger loan? Some people use the money to pay off high-interest debts like credit card debt. You could use the extra money to pay for a child’s college tuition. Many people use the money from a cash-out refinance to do home renovations which will increase the value of the home.

Regardless of what you use the money for, be aware that you will need to pay it back and your loan will be even bigger than what it was before cash-out refinancing. Thus you need to think carefully to determine if your need for cash justifies taking an even bigger loan on your home.

Lenders have limits on how much you can borrow. Typically you can expect to borrow up to 80% of the home’s value though, some allow you to borrow up to 85% (FHA loans) or as high as 100% (VA loans). For example, let’s say our home is worth $300,000 and you still owe $200,000 on it. Cash-out refinancing will allow you to borrow $240,000 (80% of $300,000 is $240,000). But you already owe $200,000 on the house, thus the amount you could get is $40,000 ($240,000 allowed minus 200,000 already owing).

If you are interested in Arizona Cash Out Refinancing, call HD Lending to learn more. HD Lending specializes in hard money lending. Fewer documents are required and approval is faster than that compared to conventional loan applications. Call us at: (480) 808-8687.

Arizona Cash-Out refinancing
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