What is cash-out refinancing?
Cash-out refinancing replaces your current home loan with a bigger mortgage, allowing you to take advantage of the equity you’ve built up in your home and access the difference between the two mortgages (your current one and the new one) in cash. The cash can go toward paying for your long-term care.
How a cash-out refinance works
The process for a cash-out refinance is similar to a rate-and-term refinance of a mortgage, in which you simply replace your existing loan with a new one for the same amount, usually at a lower interest rate or for a shorter loan term, or both. In a cash-out refinance, you can do the same, and withdraw a portion of your home’s equity in a lump sum, cash payment. Since you repay the loan as part of your new mortgage, the interest payments are tax-deductible. Since you will be paying off the loan for what may be many years, a cash-out refi is best used for a large expense with substantial upfront costs, which will provide benefits into the future.
If you are interested in learning more about cash-out refinancing, contact a WFA Advisor today 414-727-8181.