Get Extra Money with a Refinance
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Get Extra Money with a Refinance
Depending on when you decide to refinance your home loan, you may have built up enough equity to take advantage of current refinance rates and give your personal accounts a cash boost.
Every month that you pay your mortgage payment, you pay a small portion of your principal down and the rest of the payment goes toward interest. As you pay your principal down, you increase the difference between what you owe on the house and what the house is worth, and that creates equity.
When you take advantage of current refinance rates, you can lower your mortgage interest and tap into the equity you've created over the years by refinancing for an amount that's closer to the home's appraised value than it is to the home's current loan balance. When you do, the lender of your refinanced loan will make a check out to your former lender for the amount of the outstanding mortgage and will write you a check for the difference between the refinanced amount and the outstanding balance.
Remember, when you tap into your equity during a refinance, you're essentially paying interest twice on part of your home because you created the equity by paying principal and interest on that portion of your original home loan.
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| Kristle Jones |
