San Diego, CA (PRWEB) October 10, 2013
LoanLove.com is a borrower advice website that provides detailed insights into the mortgage industry in a fun and entertaining way. The team at LoanLove.com is devoted to help empower both first time and experienced homeowners with valuable resources, first-class knowledge and connections to top-rated industry professionals and has the mission of helping consumers and borrowers to obtain the latest information on mortgage lending trends, the real estate market and the U.S. financial landscape in order to help them obtain a home loan that they will love. In order to help borrowers find the best loans for their situations, the website is continuously updated with new materials that can help them understand the options that are available to them. A newly posted article from the website titled “What Is a Cash Out Refinance? (Clearing The Fog)” continues to help borrowers by explaining the details of this particular type of refinance loan.
The article starts off by saying: “It used to be that one of the goals of homeownership was to eventually pay off your home loans and live in your house mortgage-free. Sucker! Nah, just kidding. But it is true that in the past couple of decades, that kind of mindset has kind of gone by the wayside for a lot of people. Why? Well, for one thing, tax laws that let you deduct your mortgage interest are a big plus for a lot of homeowners: Pay off your mortgage and you lose one of the biggest tax advantages available to the average (i.e., not super-rich) person. Also, while your parents or grandparents may have had a difficult time accessing any equity they’d built up in their home over time, many lenders today have made it easy to tap into that equity with equity loans, lines of credit and the ever-popular cash-out refinance.”
Loan Love explains that the concept of a cash out refinance is actually quite simple. Basically, with a normal housing market, a person’s home should increase in value over time. As they pay off their mortgage, they may start to see a significant gap between what they still owe on their house and what their house is actually worth. This gap is the equity that can be freed up in a cash out refinance loan. This type of refinance allows the home owner to refinance the terms of their loan and place a new and bigger mortgage on it which will enable the owner to access the equity they have built on their home. The Loan Love article gives an example:
“For instance, say you have a mortgage of $150,000 remaining on your home. Over time, the value of your home has increased to $250,000. That $100,000 difference is the equity you have in your home, and thanks to the cash-out refinance, it could be burning a hole in your pocket in just a few weeks. Of course, you typically can’t access the entire amount of your equity. Usually, you’re limited to a loan-to-value (LTV) ratio of about 80%, although some lenders may allow 90% LTVs (generally with a significantly higher interest rate as well as points – and you’ll also have to pay private mortgage insurance).”
There are many reasons why a homeowner might want to cash out, and some of these are listed in the article. But regardless of what the reason is, the fact is that the equity is the homeowner’s money, and a cash out refinance can give them access to it as well as help them to refinance to today’s lower rates and save lots of money that way, as well. For more information on the mechanics of cash out refinances, please visit LoanLove.com for the full article.