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February 03, 2018
Las Vegas Cash Out RefinanceWith housing prices on a steady incline in Las Vegas, homeowners are beginning to regain some equity in their homes. This newfound money source can be tempting to tap into and a cash-out refinance could be a good option to help pay for a home project, pay-off other high interest debts, pay for education costs, or use towards another big life purchase. While this can be very beneficial, there are some pros and cons to consider.

How it Works

Cash out refinancing is similar to taking a second mortgage on your home with a few exceptions. When you take out a line of credit or second mortgage, you are paying two separate monthly payments on your home versus a cash out refinance where you entirely pay off your first mortgage and take a second mortgage out based on the new appraised value of your home.

Pros

  • You will receive a lump sum of money that can be used for a large purchase, to consolidate debt, or however you see fit.
  • Providing you owe less than the house is worth, this type of loan is relatively easy to qualify for.
  • If you use the money to pay off other higher interest debts, you are consolidating non-tax deductible debts into a tax deductible debt.
  • Interest rates on cash out refinances are typically lower than you will find on a line of credit.
  • You will only have to make one monthly mortgage payment, not two.

Cons

  • Just like the first mortgage on your home, when you refinance, you are required to pay closing costs. This can be thousands of dollars so if you do not have enough equity in your home to offset these fees it may not be worthwhile to refinance.
  • The market is just beginning to recover and there is still uncertainty in the economy. If your home loses value, you could find yourself underwater on your mortgage and in financial trouble if you decide to sell.
  • In most cases, once you have 80% equity in your home, you can drop your costly monthly mortgage insurance payment. If you refinance and pull more than 80% equity out of your home, you may be stuck paying that monthly fee again.

It is important to weigh all of the pros and cons before you make the decision to refinance and make sure that it is worth it and will make financial sense long term.

If you are interested in looking into a cash out refinance or discussing the various ways you can access equity in your home  simply fill out our Fast Response form or give us a call in our local branch office in Las Vegas, Nevada at 702-669-5400. Our experienced Las Vegas mortgage professionals would be happy to discuss how we can help.

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