Knowing how cash-out refinancing works — and the advantages — can help you decide if it’s right for you. See below for our guide on CIT Bank Cash-Out Refinancing.
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CIT Bank Cash-Out Refinancing
What exactly is cash-out refinancing and how does it work? Quite simply, you take out a new home loan to pay your first mortgage, PLUS you convert a portion of your available home equity into cash – which is paid to you at closing in a lump sum. The extra cash amount is added to your new home loan. CIT Bank Cash-Out Refinancing
- So let’s say you have a $300,000 home with a $150,000 first mortgage. That means you have $150,000 in home equity ($300,000 – $150,000).
- Let’s assume you only need about $50,000 to make some much-needed home improvements.
- To access that $50,000 portion of your available home equity, you would refinance your home loan with a mortgage in the original amount of $150,000, PLUS an additional $50,000 would be added to your mortgage balance. That would give you a new home loan in the amount of $200,000.
- And you would receive a check made out to you in the amount of $50,000 at closing (minus any costs associated with the refinance).
Another benefit of cash-out refinancing: Debt Consolidation
If you’re carrying a lot of credit card debt at a higher interest rate than your home loan, a cash-out refinance can be a smart move. Using the same example as we used above, here’s how it might work. CIT Bank Cash-Out Refinancing.
- You have a $300,000 home with a $150,000 first mortgage which translates to $150,000 in available home equity ($300,000 – $150,000).
- Let’s assume you have $20,000 in credit card debt along with a $20,000 auto loan.
- Here again, a cash-out refinance can offer you access to a portion of your home equity in this case, the $40,000 you’d need to pay off your credit cards and your car loan.
- You would refinance your home loan with a mortgage in the original amount of $150,000, PLUS an additional $40,000 would be added to your mortgage balance. That would give you a new home loan in the amount of $190,000.
- And you would receive a check made out to you in the amount of $40,000 (minus any costs associated with the refinance) at closing, which you could use to pay off your credit cards and your auto loan.
Consider, too, that you get the benefit of tax-deductibility with a mortgage loan; a benefit you don’t enjoy with other debt. CIT Bank Cash-Out Refinancing
Remember this. If you choose cash-out refinance, be sure to use this option responsibly and make your payments in full and on time. You will be adding debt to your mortgage, and you don’t want to risk losing your home. CIT Bank Cash-Out Refinancing.
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Author’s Verdict
If you’re seeking more knowledge on how cash-out financing works, hopefully this CIT Bank Cash-Out Refinancing guide helped you! Let us know if it did in the comment section below or help add onto our list! Let us know about your thoughts and experience with CIT Bank in the comment section below! If you’re interested in more info regarding CIT Bank offers, check out our full listing of CIT Bank Deals, CIT Bank Bonuses, & CIT Bank Promotions. Be sure to check back on BankDealGuy for more bank deals!
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