Learn How Cash-Out Refinancing Can Help You

With the recent spike in home values, you may have experienced a sudden dramatic increase in home equity. Due to the lower interest rates and increased equity, cash-out refinancing is becoming increasingly popular. Even with the popularity of cash-out refinancing in Florida, many folks are unaware of the ins and outs of this financial strategy. Let’s examine what cash-out refinancing is and how you may be able to take advantage of it.

Cash-Out Refinance Loans Explained

Like any other refinance loan, you pay off your current home loan or mortgage with a new mortgage with different terms. The key to the cash-out refinance loan in Florida is that the new loan will have a higher value than what you previously owed on your mortgage. The difference between the old loan’s remaining balance and the new loan’s value can then be taken out as cash for whatever you need.

To put this in perspective, you are merely borrowing money against the equity in your home. Usually, you can borrow up to 80% of your home’s value. For example, let’s say you owe $50,000 on a house valued at $100,000. You could do a cash-out refinance loan for a total of $80,000.

You would pay off your old loan of $50,000 and then have $30,000 in cash (minus the closing costs) to make improvements, take a vacation, or do whatever you wish. You continue to pay one mortgage payment, perhaps even for the same or less monthly payment, with a new influx of cash and perhaps a better interest rate.

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Eligibility for Cash-Out Refinance Loans in Florida

Obviously, the more you can cash out, the more equity you have in your property. Since in most places, including Florida, you are only allowed to take out a cash-out refinance loan for 80% of the value of your home, you need a minimum of 20% equity in your property before you can be considered for a cash-out refinance loan in Florida.
There is one exception to the 80% rule, which would allow you to borrow more than 80% of the value of your home. Typically, this is for the original mortgage, but you may be able to find a lender who will do this for the cash-out refinance as well. To get above the 80%, you would need to include private mortgage insurance as part of the loan package.

This insurance ensures that a lender can get the total value back if you default. This additional payment is rolled into your monthly payment and continues until the loan-to-value gets below 80%. This is valid for both conventional and cash-out refinance.

Uses and Benefits of Cash-Out Refinance Loans in Florida

One benefit is that with the lower interest rates, you may be able to reduce your interest rate on your mortgage payments. You should make a thorough comparison with several lenders to ensure you get the best rate possible. You can also change your loan type from an adjustable-rate mortgage to a fixed-rate mortgage, or vice versa. However, it’s usually advantageous to lock in the lower rate rather than changing to or sticking with an adjustable-rate mortgage.

You may be wondering what some good use cases for your new cash flow are. One of the most common and fiscally wise things you can do is use the funds to improve your property. Alternatively, another fiscally sound idea is to use that money as a down payment for another investment of some kind, such as another property for use as a vacation home or income-generating property.

Some other possible ways to use the funds include the following:

  • Pay off any outstanding medical bills.
  • Add the funds to your retirement portfolio.
  • Pay off any high-interest loans or credit cards.
  • Take that much-needed vacation you have always wanted, with or without your family.

While you can use the funds any way you want, you should make sure it’s either worth the additional cost or makes money for you.

Should You Take Out a Cash-Out Refinance Loan in Florida?

There’s no question that a cash-out refinance loan in Florida is an excellent way to get your hands on some cash in a relatively short amount of time. However, that doesn’t mean it’s right for everyone. There are better solutions to most situations than taking a cash out to refinance a loan in Florida. The first thing you want to determine is whether you have the discipline to make smart financial decisions and repay the outstanding debt properly and not waste it, make poor decisions, or take on more than you can handle.

Make sure your decision keeps you within your means, not above them, so you’re not eternally stuck in debt. Refinancing might still be a good option, in which case you should do a rate or term refinance, which gets you a better rate or more favorable term for your mortgage. This can save you substantial money over time. Either way, you should consult a professional to discuss the pros and cons of a cash-out refinance loan in Florida to ensure it’s the right choice for you.

Seek Professional Assistance for Your Cash-Out Refinance Loan in Florida

It can be a complicated process, even if you’re confident that a cash-out refinance loan is something you wish to do. Therefore, working with someone with experience and expertise in the area is essential. The professionals at Titan Funding in Florida have the necessary knowledge and experience to work you through the cash-out refinance loan process.

If you’re interested in learning more about getting a cash-out refinance loan in Florida or want to know more about any of our other financing options, reach out to our team at Titan Funding. You can reach us at 855-928-0737 or complete our secure online form to get started. We’re available to take your call or meet with you in person Monday through Friday from 9 a.m. to 6 p.m.

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