You might’ve been told again and again that the sooner you refinance your home, the better. With the historic lows of mortgage rates, it’s important to know the perfect time to slice your monthly payments into smaller chunks. If you want to refinance, but still runs out of reasons to finally convince yourself to go, then consider home refinance for home improvement. Have a better judgment about this matter by knowing the advantages of this purpose for refinancing.
Equity and cash-out refinancing
Equity amounts to your homeownership. The amount of your home that you have paid is what it’s all about. When going for cash-out refinance, you have the chance to replace your current loan with a larger loan. The difference between the two is your takeaway or cash-out. As you do this, you only not pull out the equity that you already earned, you can also extend the term of your loan.
To give you a better understanding of this matter, take the following calculations for example:
Equity calculation: If your home is worth $200,000 and your mortgage balance or the amount owed is $190,000, your equity is $10,000, which means you own 10% of your property.
Cash-out refinances calculation: If you owe $190,000 on your home but need money to pay for home improvements, you can refinance your loan for $210,000, leaving you $20,000 to use as you wish.
As you use the money to good use by having home refinance for home improvements, you can also increase the value of your property. As not all home improvements can increase resale value, it’s important only to have the projects that can bang for your luck. Kitchen and bathroom upgrades are some of the home improvement projects in best-sellers. Keep posted for more information about the ups of home refinance.