Refinancing your Mortgage for
Extra Cash
Women who want to start their
own business tend to have the same anxiety: They’re tired of the
9 to 5 drudgery and the glass ceiling, but they wonder if they have enough
money to make it on their own. If you’re an aspiring entrepreneur,
you can quell your anxiety by considering a cash-out home mortgage
refinancing—a simple method for accessing the capital needed to stand
on your own two feet.
“Home sweet home” can mean
“loan sweet loan” when it comes to launching your own business. A
cash-out home refinancing is a funding method that’s been used by many
small business owners to launch their ventures. It’s easier to get
than a business loan, and could actually result in a lower monthly payment
on your home mortgage if interest rates are favorable.
A Mortgage Can Make
it Happen
A cash-out refinancing is
different from a home
equity loan. A home equity loan is usually taken out after you have
a home mortgage, and has been traditionally used for home improvements
or to pay off credit card debt.
A cash-out refinancing is
like combining a first mortgage and a home equity loan. The money
you’re cashing out from your home equity, and the amount you currently
owe on your home loan, is rolled into one mortgage.
There’s a potential extra
bonus if you refinance
using this type of loan. Providing that the interest rates are lower,
you may find that, even with the cash out, your monthly payment actually
decreases. Add in the fact that the interest you pay on the loan
is tax deductible, and you and your business can get some terrific funding.
Cash-Out Cautions
Before you sign that dotted
line and get the cash that your soon-to-be thriving business needs, you’ll
want to be aware of a few potential pitfalls. One is that you’re
tapping into the equity of your house. If some unforeseen event occurs
that requires that you put the house up for sale, you won’t recoup as much
profit from the sale due to the loan. In fact, if you’re in one of
those hyper-hot real estate markets and the housing bubble bursts, shrinking
home prices may force you to sell at a loss.
Another pitfall: home appraisers
may pump up the value of your home so that a lender can offer you more
cash. Be careful to borrow only the money that your business needs.
An inflated appraisal won’t necessarily translate into an attractive price
for a buyer.
Finally, shop around for
your loan and make sure you that get the best rate with the lowest fees.
A cash-out mortgage refinancing
could be the rocket fuel you need to help your business blast off.
But you must act like a prudent small business owner. Make sure that
you don’t overextend yourself, and get the best deal the market can offer.
By combining common sense with this excellent cash-generating vehicle,
you and your business can be off to a terrific start.
By MortgageLoan.com Staff
Editor
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