Have you ever thought about refinancing your mortgage? Refinancing is the replacement of one mortgage with a new one. The new mortgage pays off the old mortgage entirely. There are many reasons why a person would want to refinance, for example, to consolidate your debt, get a better mortgage rate, or what we are going to be talking about in this blog to tap into your home’s equity. More specifically we are going to be talking about what you can do with the money after you refinancing your home.
Tapping into your home’s equity with a refinance is called a cash-out refinance. This is the process of taking out some equity in your home and then adding it to your new refinanced mortgage. Let’s say your original mortgage is worth $150,000 and you want to free up $50,000 after you refinance, your new mortgage would be $200,000. Here are some things you can do with the freed-up capital you would have after you refinance your mortgage.
Using a cash-out refinance to add renovations to your home is a great investment to make. This would not only increase the value of your home but you can also create the dream kitchen, bathroom, or master bedroom you have always dreamed of. Check out which renovations add the most value to your home.
Investing in real estate is one of the best ways to build wealth. With the extra cash you have from your refinance you could invest into a long-term rental property, purchase a duplex live in one half and rent the other out, or buy a fixer-upper and flip it. If you purchase enough properties you could form a real estate pension plan and have cash flow coming in while you are retired.
Investing in the stock market is another solid way to build wealth. The average return on the stock market since 1926 has been 10% so investing in the stock market can be a great way to diversify your investment portfolio and build wealth for the future.
If you have always dreamed about starting a business, a cash-out refinance can be the way to go. The freed-up equity from your cash-out refinance can help get your business off the ground. Paying for any start-up expenses that may have been holding you back in the past.
A cash-out refinance can also be a great way to pay for schooling expenses. If you want to send your kid to college and the first year of tuition costs $20,000. You can tap into your home’s equity and get a new mortgage with $20,000 added on.
The best time to refinance is when your mortgage is close to maturity. It is best to do some homework and find out the penalty and other costs, if there are any. At ShopMortgages.ca we will calculate the cost and determine what path is best for you.
As you can see, there are many paths you can take once you refinance your home. We hope that this blog gave you some ideas on what you can do after the cash-out refinance. If you are interested in refinancing let a ShopMortgages.ca agent help you along the way. Call our office at 519-250-4848 to book an appointment.