I have a 20-year ARM mortgage that will be paid off in three years. I need ten thousand dollars. Should I refinance and pull out equity?
Answers | 2
Hello, yes it makes sense to do a cash-out refinance and pull the $10,000 out as long as you have sufficient equity. You can typically do a cash-out up to 80% of the appraised value. I suggest doing so because rates on a 15-year or 10-year term are between 2.75-3%. It makes sense to put all of your money in this case on a low fixed-rate mortgage instead of doing a second mortgage or home equity line of credit. Second liens are typically higher interest rates or have adjustable rates that are interest only. I hope that helps you make an informed decision.
You might consider a HELOC (home equity line of credit) for the amount needed. It should be free to obtain and you can use the funds at your convenience. Plus if you don't use it - you don't pay anything for it. Check with your bank for options and also the smaller to mid-size credit unions in your area. Good luck