Real Estate: Let’s talk refinance

By Skylar Welch

Let’s talk refinances. When someone thinks of a refinance, they usually think of lowering their monthly payment or cutting the term of their loan, however there are so many other uses of a refinance.

2020 was a difficult year for so many people for so many reasons. One of which was the financial burden that people incurred when their work shut down, they were furloughed, or their hours were cut. Many couples were forced to have one parent leave their job or cut hours to stay home and homeschool their children. During this time, people racked up credit card debt, took out personal loans, and financially over-extended themselves. Now, they are having a difficult time digging themselves out from under the high interest debt and keep their heads above water.

Does this scenario sound familiar to you? If you currently own a home, a great option for you, may be a cash out refinance. Interest rates are still extremely low and with a cash out refinance, you can take cash out of the equity you have in your home, to pay off all of the debt you have, whether it be credit card debt, a second mortgage, installment loans or student loans, while locking in at a low, fixed interest rate, amortized over a longer period of time. This way, you pay off your debt, and lower your monthly payments, to put yourself financially in a much better place!   

If you haven’t noticed lately, the market is crazy.  Properties are flying off of the market as fast as they are listed, and buyers are having difficulty putting properties under contract. A lot of people want to sell their home, but they have nowhere to go, causing a stalemate in the market. An option that homeowners have, is taking a cash out refinance, to make the improvements or fix what is needed, to turn their current home, into their forever home, rather than trying to throw themselves into this difficult market. Home values are higher than ever, so there is no better time to make this happen.

Another common trend during the last year, is a lot of people have found themselves spending a lot more time at home, leading to a lot of home improvement projects! Whether it be to add a garage, put on an addition or create a pool and patio oasis, coming up with the funds to make these dreams a reality, can be difficult.

However, if you currently own your home, taking a cash out refinance, to take equity out on your existing home, can be a great option! Again, you can lock in at a low interest rate and receive the cash you need to make the improvements you want, while adding value to your home!

One last way to use a cash out refinance, is to pull some equity that you have in your home, to use as a down payment on another property.

Whether you have been looking to purchase a second home at the lake or on the ski mountain, or if your dream is to start investing in real estate, coming up with the down payment, can sometimes be tricky. A cash out refinance can be a great option to obtain the cash, rather than having to pull out of your retirement or take out a high interest personal loan.

These are all some great ideas on how to use the equity you have in your home, as a financial tool. Next time you think of a refinance, don’t just think of it as a way to lower your interest rate (because lets face it, if you have purchased a home in the last three to five years, you likely have a great interest rate), but start thinking of it, as a way to put yourself in a better financial situation or to add value to your home. <

Skylar Welch owns Maine Pointe Lending is at 202 US Route 1, Suite 102 in Falmouth. Call 207-949-3568 or find them online at www.mainepointelending.com. They’re also on Facebook at https://www.facebook.com/skyeclosesmaine/