Home Equity Advantages, Part 2

Cash-out programs allow borrowers to receive up to 80% of the loan-to-value ration for their home. In other words, the lender would pay off the borrower’s existing loan and provide cash up to 80% of the home’s value. (For example, a homeowner who refinances a home valued at $300,000 -- and whose balance on his existing loan is $200,000 -- would be eligible for up to $40,000 cash.) Homeowners can then use that money to help pay for a college education, investments, or purchase a vacation home. All related closing costs, financing costs and prepaid items can be rolled into the new loan amount, further maximizing your borrower's cash flow potential.

If the interest rate offered for your refinanced mortgage is significantly higher than your current rate, cash-out refinancing may not be a sensible choice. In this case, a home equity loan or line of credit (HELOC) might be a better idea. While cash-out refinancing is a replacement of your first mortgage; HELOCs are separate loans on top of your existing first mortgage.

The opportunity to use the equity you have built up in your home is one of the benefits of homeownership. When you need cash for a home improvement project, to pay off high-interest consumer loans, or to finance higher education, you need not look any further than your own front doorstep.

To learn more about home equity loans on your New Hampshire property, call Compass Mortgage at (603)472-2272 or visit www.CharleyFarleyHomeLoans.com.