Mortgage-Refinance Loan Can Put Cash in Your Pocket
Do you need cash? Here's a mortgage for you. If you are not in a good position to take an equity line of credit on your home, because you have not built enough equity or a poor credit situation is making bankers steer clear of you, altogether, there is another option -- the cashout refinance. This loan does what the equity line does in most cases, but it is not an interest-only loan, and it has conventional mortgage terms. The advantage for people without enough equity and less than perfect credit is you can get at what little equity you do have by refinancing to a new conventional mortgage, taking cash out at the close of the loan.
Here's how it works.
Let's assume you have a home valued at $110,000. You owe $86,000, and you would like to get $8,000 in cash to pay off two small credit cards with high interest and to do some minor rehab work on you home. With your B credit rating, banks won't give you 100 percent of your equity or even 95 percent, so an equity line won't work.
However, you will qualify for a 90 percent cashout refinance loan. In order to keep your costs down, you combine this strategy with another one, an adjustable rate mortgage, and this helps you maintain a low monthly payment.
You need about $4,000 to close the loan (remember it's a conventional mortgage with all the closing costs -- equity loans can be closed with no costs at all). The closing costs, though, will be financed into your new loan, so you don't have to come out of pocket with any money.
So, you get a new mortgage for $99,000, which pays off your old fixed rate mortgage loan, covers the closing costs and, best of all, leaves you with $9,000 in cash -- $1,000 more than you actually need.
The ARM rate is probably one percent less than your old fixed rate, so your payment will stay close to what it was. Plus, you eliminate monthly credit debt, so you have created even more cash! This is just an overview of a very powerful loan.
Mark Barnes is the author of the new novel, The League, the first work of fiction, based on fantasy football. He is also an investment real estate and home loan finance expert. Learn more about his suspense thriller at http://www.sportsnovels.com Get his free mortgage finance course at http://www.winningthemortgagegame.com
Latest News
 CNBC | A Rush Into Refinancing as Mortgage Rates Fall New York Times, United States - Mortgage rates immediately dropped, and that led to a surge in mortgage refinancing activity for the week — even with the Thanksgiving holiday. ... Mortgage Refinance Applications Soar As Rates Fall Homeowners' Refinancing Jumps by Record Pace Treasury mulls plan to lower mortgage rates to 4.5% |
 Yahoo | US MBA’s Mortgage Applications More Than Doubled Last Week Bloomberg - The Mortgage Bankers Association’s index of applications to purchase a home or refinance a loan jumped 112 percent to 857.7, the highest level since March, ... FINANCIAL STOCKS Bulls outlast bears in Wednesday grudge match Falling rates spark rush to mortgage applications UPDATE 1-US mortgage applications post largest gain ever |
Lower mortgage rates help but jobs, prices key Reuters - Applications to buy and refinance homes hurtled higher last week as the lowest rates since the summer of 2005 unleashed pent-up demand. ... |
 Gothamist | Bally Total Fitness files for bankruptcy again San Francisco Chronicle, USA - Refinance volume more than tripled, while purchase volume increased 38 percent. Refinances accounted for 69.1 percent of applications, up from 49.3 percent. ... Thanksgiving week saw rise in mortgage activity |
 Boston Globe | Geithner May Seek to Push Bair Out After Clashes During Crisis Bloomberg - ... that contributed to the subprime mortgage mess. This year, Bair has proposed using taxpayer funds to help refinance loans for struggling homeowners. ... Mortgage proposal has faced conflict |
US Economy: Service Companies Shrink at Record Pace (Update1) Bloomberg - “Things overall still look bad, but this, together with last week’s doubling in MBA refinancing, provide glimmers of hope,” Ian Morris, chief US economist ... |
UPDATE: Builders Soar On Lower Rates, But Pain Persists CNNMoney.com - As consumers raced to lock in lower rates, applications to refinance existing loans jumped 203.3% last week from the week before, while mortgage ... "Good" news on housing |
Mortgage Brokers: Now Is Good Time To Refinance MyNC.com, NC - By Lauren Hills, NBC17, 14 hours, 38 minutes ago While most money matters aren't looking up right now, if you're looking to refinance your home, mortgage ... |
Fresh Data Is Sour Forbes, NY - 28, from the previous week's 404.4 reading, according to the Mortgage Bankers Association's survey. Refinance volume more than tripled, accounting for 69.1% ... |
Fed’s Kroszner Says Foreclosures Harming Middle-Income Areas Bloomberg - ... the highest on record as home prices dropped and stricter mortgage standards made it harder for homeowners to sell or refinance, RealtyTrac Inc. said. ... |
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