Are you looking to cash-out on your home? Make sure you do it right. All too often, homeowners make avoidable mistakes when they refinance that end up costing them thousands of dollars. Here are four cash-out refinance mistakes that you’ll want to avoid.
Not Shopping Around for the Best Rate
When you’re looking to cash-out refinance, it’s important to shop around and compare rates from different lenders. You might be tempted to go with the first offer you get, but considering the broad range of rates out there, it’s worth it to take the time to find the best one for you.
Not Understanding the Fees
There are a variety of fees associated with cash-out refinancing, from the appraisal fee to the loan origination fee.
Be sure to ask your lender about all the fees involved so there are no surprises when it comes time to close on your loan.
Borrowing More Than You Need
When you’re taking out a loan, it’s important to only borrow what you actually need.
If you borrowed more than you needed, you’ll end up paying interest on the extra money you’re not using – that’s wasted money that could have gone towards other things.
Not Leaving Equity In Your Home
When you cash-out refinance, you’re essentially taking out a new loan to replace your existing mortgage.
This new loan will have its own terms and conditions, which may not be as favorable as your current mortgage.
It’s important to leave some equity in your home so you have some financial cushion in case things don’t go as planned.
Cash-out refinancing can be a great way to access the equity in your home, but it’s important to do it carefully. By avoiding the mistakes outlined above, you can save yourself a lot of money and hassle in the long run.
