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And the WORD for Today is:
Cash Out—is a term most commonly associated with refinancing. The popularity of the cash out refinance has resulted in a depleting of home equity across the nation and left millions of homeowners who were financially secure and confident of continued home ownership teetering on the edge of foreclosure. A cash out refinance means to take out some (or the entire) amount of a seller’s equity in cash rather than retain some interest in the property. The borrower is trading equity, which has accumulated over a period of time for cash which will usually be utilized for something less stable than their home. Aggressive marketing and slick salespeople have been exceedingly successful in convincing the American public that the cash refinance made great sense as a way to have or do whatever you want to do—RIGHT NOW. Unfortunately, there has not been a corresponding educational campaign about the risks associated with undermining the stability of your single largest investment—your home. Nor have there been meaningful conversations about the long-term implications of the cash-out craze during the past 10 years. Unprecedented foreclosures among seniors who had substantial equity is the fall-out.
Cash-Out Refinance—has become a very popular way for consumers to get money for any number of things by refinancing their home and getting cash back at closing. Also commonly called “taking out your equity” this is not a bad idea IF you actually have equity. It is a problem if you borrow to the extent that you either owe as much as the home is worth OR borrow in EXCESS of the value of the home. You will have created an upside down situation, making it difficult or impossible to sell your home.
Cash Out—is a term most commonly associated with refinancing. The popularity of the cash out refinance has resulted in a depleting of home equity across the nation and left millions of homeowners who were financially secure and confident of continued home ownership teetering on the edge of foreclosure. A cash out refinance means to take out some (or the entire) amount of a seller’s equity in cash rather than retain some interest in the property. The borrower is trading equity, which has accumulated over a period of time for cash which will usually be utilized for something less stable than their home. Aggressive marketing and slick salespeople have been exceedingly successful in convincing the American public that the cash refinance made great sense as a way to have or do whatever you want to do—RIGHT NOW. Unfortunately, there has not been a corresponding educational campaign about the risks associated with undermining the stability of your single largest investment—your home. Nor have there been meaningful conversations about the long-term implications of the cash-out craze during the past 10 years. Unprecedented foreclosures among seniors who had substantial equity is the fall-out.
Cash-Out Refinance—has become a very popular way for consumers to get money for any number of things by refinancing their home and getting cash back at closing. Also commonly called “taking out your equity” this is not a bad idea IF you actually have equity. It is a problem if you borrow to the extent that you either owe as much as the home is worth OR borrow in EXCESS of the value of the home. You will have created an upside down situation, making it difficult or impossible to sell your home.
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You can find more helpful definitions of WORDS like these in Your Real Estate Advisor which can be purchased at www.DovePublishingHouse.com.
(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)
(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)
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