Question by Need Help With “?” & A: Some people talk about pulling $ $ $ out of a home after it increases in value with a refinance.How does it work
Ok Guys, Im new to this whole home buying thing, but I just have a question because I hear about it all the time. When someone refinance a house after a few years, they get a lower rate and they have amassed a good amount of equity both from paying the mortgage and from increases in home value. If they refinance, how do they pull out cash from the refinance and still maintain the same payment, sometimes lower?
Lets take this scenario: $ 620000 home. $ 400000 mortgage for 30 years @ 6.5%. After ten years the home increases to $ 1000000 and balance on mortgage is $ 340000. Lets say after the refinance the rate is 5%. I know the new payment for another 30 years would be $ 1825/mo but “how and what would they be able to pull out”?
Can anyone explain (in lamens terms)? thanks so much!
Answer by Vanessa C
its really depends on the home value and the equity, plus fees associated w/ the refinaince. sometimes you can buy down you interest rate, which costs more money. i would only refinance if i could get a better interest rate. be careful what you intend to pay off w/ your re-fi……..you can write it off, but you may end up paying enourmous fees to re-fi
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