Refinancing

There are two different types of refinances; Cash-out refinance and no cash-out refinance.  A no cash-out refinance is one that includes paying off your current mortgage and closing costs into a new mortgage.  A cash-out refinance is one that includes paying off your first mortgage, closing costs, and any other debt exceeding $2,000.

No cash-out refinancing is generally done for any of the following reasons:

• The fixed period of your ARM has expired putting you into a higher variable rate.
  

• To lower your existing rate
  

• To change the current term of your loan and improve cash flow
  

A Cash-Out Refinance lets you take advantage of the equity over the years you have built up and receive Tax Free Cash to use as you see fit.

Some example of use of cash out proceeds are:

• Buy a New Car or Recreational Vehicle
  

• Buy a vacation home
  

• Consolidate Credit Cards
  

• College Tuition
  

• Home Improvements
  

• IRS Income Taxes
  

• Divorce Settlements
  

• Pay off high interest loans
  

• Past Due Taxes
  

• Start Up Businesses
  

One of the major advantages of consolidating debts by the cash-out refinancing is that the interest paid on your mortgage becomes tax deductible. For example, if you used the cash-out money to pay off your automobile loan payment, you have just converted the non-tax deductible interest (automobile loan interest) into tax deductible interest (mortgage interest payment).

Many people invest the cash taken out of their equity to improve the value of their home. Adding an additional room, deck, or pool will provide enjoyment as well as help increase the value of your home.

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