Americans are in more credit card debt than ever, and there is a simple, proven solution: cash-out refinance. Whether it’s credit cards, car loans, or student loans, if you’re a homeowner looking for cash and have equity in your home, a cash-out may provide you with a simple and achievable way to get out of debt.
If you used your credit cards in the past year to help with daily living expenses because of increased inflation and the cost of living, you are now paying higher interest for those credit card purchases. Why would you continue to pay 20% interest1 for gas you bought last year instead of consolidating your debt by refinancing your mortgage?
A cash-out refinance takes the equity you have built up in your home, replaces your current home loan with a new mortgage, and when you close on the loan, you get the difference back in cash. You can use this cash however you would like, including to pay down debt.
A cash-out mortgage refinance can be a smart move to help consolidate or pay off your debt. Paying off multiple loans and high-interest debt can help you streamline your monthly payments and provide multiple benefits.
Here is a simple example of how you can use the cash you receive to pay off multiple debts, simplify payments, and lower your overall monthly bills.
The amount of money you can receive with a cash-out refinance varies and is dependent on the amount equity that has been built up in your home. Home equity is the difference between what is owed on the mortgage and what the home is currently worth. For example, if you owe $100,000 on your mortgage and your home is worth $350,000, this means you have $250,000 of home equity.
Two ways home equity can grow are:
the amount of equity in your home will rise as you pay down your mortgage and
the amount of equity will increase if the value of your home goes up
Ready to review your cash-out options and how much debt you may be able to pay off? Our PHH Loan Officers can calculate your current equity and available cash 800-451-1895.