HELOC or a Refi? This Refinance Cash Out Mortgage Calculator is a Great Place to Start.

We live in a culture of more. Once you meet one goal, another can swiftly replace it. A recent Gallup survey revealed that less than half of Americans (47%) reported being “very satisfied” with their personal lives, which is near the record low for this measure.

So, even if you’ve accomplished significant life milestones, like becoming a homeowner, what’s next? From renovations and debt consolidation to saving for a large purchase, getting your hands on five figures or more would help move things along. But who’s got that kind of money lying around?

The cost to refinance mortgage loans like yours could be worth it, since home equity loans, home equity lines of credit (HELOC), and cash-out refinance loans can quickly line your pockets. Let’s dig into what home equity is and how a refinance cash out mortgage calculator can be a great tool as you explore your options.

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What’s Home Equity Anyway?

Imagine you bought a house for, let’s say, $300,000. Over time, you’ve been paying off your mortgage, and let’s assume you owe $200,000. Your house’s value has also increased because the market’s doing well, and now it’s worth $350,000. In this case, your home equity would be $350,000 (the current value) minus $200,000 (what you owe), which gives you $150,000 in home equity.

👀 *blinks slowly*

Let’s try this without numbers. So, your home equity is essentially the part of your house that you truly “own”—it’s the current value of your house minus what you still owe on it. Essentially, it’s the current market value of your home minus any outstanding mortgage balance or liens on the property. As you pay down your mortgage over time, your equity increases, assuming the property’s value doesn’t decrease. It represents your interest in the property and can be used as collateral for loans or lines of credit (we’ll return to this later).

When your home value increases, you gain more equity than you’ve paid. To cash in on this increased value, consider the cost to refinance mortgage loans like yours, either with a cash-out refinance, a home equity loan, or a HELOC. Each has its process and requirements, but they allow you to access the increased value of your home, often for things like lower monthly payments, home improvements, education costs, or debt consolidation.

See what your refinance rates are. Start Here! (Jul 24th, 2024)

Why Explore the Cost to Refinance Mortgage Loans Like Yours?

You’ve got bills to pay, rooms to remodel, and dream vacations to save for. Why not look into using your most significant asset as a tool to gain some financial ground? Refinancing your mortgage can be a smooth and straightforward process, especially in today’s digital age:

  1. Streamlined Paperwork: Many lenders now use digital platforms to simplify document submission, making it easier for you to upload and manage your paperwork.
  2. Efficient Appraisals: Some refinancing options may qualify for appraisal waivers, while others utilize digital tools to speed up the appraisal process.
  3. Rapid Credit and Income Verification: Lenders often have electronic systems to verify your credit score and income, minimizing delays quickly.
  4. Expedited Underwriting: Advanced algorithms and dedicated teams can accelerate the underwriting process, ensuring your application is reviewed promptly.
  5. Simplified Closing: Electronic signing (e-signing) technologies can streamline the closing process, allowing you to sign documents from home.
  6. Preparation Tips: Being well-prepared with all necessary documents and clearly understanding your financial goals can significantly ease the process.
  7. Responsive Lenders: Choosing a lender like The Moreira Team, known for our customer service and innovative tools (check out our refinance cash out mortgage calculator), can ensure you have guidance and support throughout the process, making it feel more manageable.

A Refinance Cash Out Mortgage Calculator Can Help You Determine Your Options

When you’re thinking about the cost to refinance mortgage loans like yours, it’s all about ending up in a better position than when you started. Two prevalent ways to refinance are a home equity loan or a home equity line of credit. Let’s start with the basics:

Home Equity Loan: This is a type of loan in which the borrower uses the equity of their home as collateral. It’s a fixed-term loan, typically with a fixed interest rate, in which the borrower receives the borrowed amount as a lump sum upfront. This loan is repaid over a set period, often through monthly payments that cover both principal and interest.

The cost to refinance mortgage loans like yours isn’t worth it if you use a home equity loan to cover day-to-day expenses, luxury purchases, or even consolidating debt without a repayment plan. These choices can lead to financial instability or a cycle of debt, but if you need to pay off a large lump sum, a home equity loan can help. Medical expenses, buying investment property, or becoming a business owner have all been reasons for homeowners to consider a refinance.

Home Equity Line of Credit (HELOC): a revolving credit line secured by the equity in your home. It allows you to borrow money up to a specific limit, make payments, and then borrow again as needed. Interest rates are usually variable.

Using a HELOC to fund vacations, host an event, or go on a shopping spree is not a good idea. These things offer little value or return on investment. Even buying a car or paying for a college education aren’t great choices, as auto and federal student loans often come with better rates and terms. A HELOC is ideal for projects that add value to your home, like remodeling, adding a bonus room, or completing significant repairs.

To keep it simple, a home equity loan is like getting a lump sum of money you repay over time, while a HELOC is more like a credit card linked to your home’s equity, allowing you to borrow what you need up to a limit. The confusion might come from both using home equity as collateral. An easy way to remember is that a home equity loan is a “loan” with a fixed amount, and a HELOC is a flexible “line of credit.” However, they are both considered second mortgages, so the credit requirements can be higher than a traditional first mortgage.

See what your refinance rates are. Start Here! (Jul 24th, 2024)

What’s the Cost to Refinance Mortgage Loans Like a Cash-Out Refinance?

The easiest way to run the numbers on any options is to turn to Moreira’s refinance cash out mortgage calculator. But first, it might help to understand what a cash-out refinance is – baby steps. A cash-out refinance allows you to use your home equity by replacing your current mortgage with a new one with a higher loan amount.

The difference between the new and old mortgage amounts is then given to you in cash. Unlike home equity loans or HELOCs, it’s a way to access the equity built up in your home without needing to sell or take out a second mortgage. What you don’t know about cash-out refinancing might surprise you:

  • You can borrow up to 80% of your home’s value.
  • You can use the funds for virtually any purpose.
  • You can obtain a lower interest rate compared to other loans.
  • You can leave some equity in your home because, well, it’s required.
  • You can consolidate debt into a single, lower-interest payment.

Which Option Is Best For Me?

Choosing between a home equity loan, HELOC, or cash-out refinance depends on your financial goals, current inflation and interest rates, and how you plan to use the funds. HELOCs are appealing when rates are high due to their variable interest rates, potentially lowering costs over time.

Cash-out refinances are ideal for capitalizing on lower interest rates while accessing extra cash, and they are useful for home upgrades or consolidating debts. You could even use a HELOC for immediate needs, like renovations, and later opt for a cash-out refinance when rates drop, combining your debts for a more favorable interest rate. 

The point is, you’ve got options. And you’ve got a partner on your side in The Moreira Team. From easy-to-use tools like our refinance cash out mortgage calculator to the years of experience assessing the cost to refinance mortgage loans, we’ve got your back. 

Find the best refinance rate for you and contact us today.