cash out refinance

Low Mortgages Rates are Propelling Wave of Cash-Out Refinances

The continuation of favorably low interest rates has propelled a wave of cash-out refinances, the most we have seen since the financial crisis of 2008. Many think this is cause for concern, but its not; at least not yet. Given the rapid growth in the home process in the last year, the share of cash-out refinances isn't terribly high. There were more during earlier housing booms, including the housing crash 15 years ago. A cash-out refinance allows a borrower to swap their current loan for a new one with a higher balance. So, homeowners can pay off their old mortgage and still have cash left over. A recent report found that in 2020 the amount of equity tapped into through cash-out refinances increased by 42%. These days, it appears that most borrowers are using the funds to pay down other debt and to update their homes. Home improvement spending sky-rocketed during the pandemic. Homeowners are sitting on a lot of home equity right now and what a lot of people are doing is taking this money, getting a cash-out refinance, and using the cash to make renovations to their home. Many projects from adding a screened-in porch, updating a bathroom, creating a home gym or adding an official home office all add to overall value of a home. These are smart moves to make as the improvements are actually going to help their home sell for a significantly higher amount of money in a few years. It's important to do home improvements that are low cost but add the biggest value to your home. Interested in looking into the amount of equity you could tap into? Reach out about a cash-out refinance. Whether you are looking to pay off some debt or complete a home remodel, we can help guide you ever step of the way. Call today! 801.206.4343

*Source: Kiplinger Letter: Vol.98, No.10**

Refinance Today, Save Cash for the Holidays

The holiday season is quickly approaching. Although it is deemed the best time of the year, it can also be the most stressful season when it comes to finances. Whether it be holiday décor, Christmas gifts, or travel plans the end of the year can involve a lot of expenses. Throw in the fact that we are in a pandemic and people’s budgets may be tighter than ever. According to an online survey by the Ascent in 2019 it was reported that the average consumer who bought Christmas gifts spent over $925 and that 21.5% of Americans surveyed went into debt from Christmas. Whether it be through personal loans, maxing out credit card limits, or opening new store cards many Americans do whatever it takes to pay for their holiday. But why put yourself into a debt right at the beginning of a new year, when you could find a better way to get some extra funds this December? A lot of people don’t know that a cash out refinance can be more beneficial than taking out a personal loan or maxing out credit cards. We want to help you by exploring the potential advantages of a cash out refinance on your home. A cash out refinance allows you to pay off your existing mortgage and begin a new loan, just like a traditional refinance. But instead of refinancing for what you currently owe on your mortgage, you refinance for a higher loan amount. You then get the extra amount in the form of a lump-sum payment after your loan closes. Another bonus of a cash out refinance is if interest rates have dropped since you took out your original loan, a cash out refinance could also lower your rate at the same time. Like a recent borrower we worked with who worked for a company that had been hit hard by COVID19. His hours were cut at work, simultaneously lowering the family’s monthly income. They reached out to see if there was a refinance option that could help them lower their mortgage payment to save money monthly. After running the numbers, we decided to move forward with a cash out refinance. We were able to drop their interest rate from 3.75% to 2.75%, saving them $200 a month. However, the best part is that not only did we refinance them to a lower rate and monthly payment ultimately saving them thousands over the life of their mortgage, but they were able to skip 2 months of payments and use that money in other areas of their life, like to check a few more people off their Christmas list. The borrowers were getting by despite their income drop due to COVID, but skipping the two mortgage payments and lowering their monthly payment by $200 is really going to help them out long term and allow them to put together a terrific holiday this year! If you are not sure if a cash out refinance is right for you, reach out! ALV Mortgage can help you explore your options and see what would be best for your individual situation.

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Low Mortgages Rates are Propelling Wave of Cash-Out Refinances

Refinance Today, Save Cash for the Holidays