Working from home, virtual learning, and social distancing orders all call for you to spend a lot of time at home. Looking at the same walls and working from the same dining room table can stifle motivation pretty fast. 

So whether you want to add a little spice to your living area or are just looking to make some necessary repairs to your home, considering a VA Cash-Out Refinance may be the right option for you.

What is a VA Cash-Out Refinance?

This refinance option extracts equity from your home, which you can then turn into cash. The VA Cash-Out Refinance allows homeowners to repay their mortgage over a more extended time period than initially planned, which often results in a lower interest rate. 

Note that by refinancing your mortgage, you will ultimately have a larger sum to pay off. 

One of the biggest benefits of a Cash-Out Refinance is that they can pay for themselves and have an impressive ROI. By updating your home or making necessary repairs, you can substantially increase the value of your home. 

A few additions and renovations with a high ROI are: 

• Adding on a deck

• Remodeling the kitchen

• Adding an extra bathroom

• Energy efficiency improvements

• Finishing a basement

• Refinishing or replacing the flooring

While refinancing your home to make improvements and repairs sound like a terrific idea, it’s important to weigh the pros and cons of this program. 

Pros

• You’ll likely have access to lower interest rates than alternatives loan options

• Lower monthly mortgage payments if you refinance with a lower interest rate than you originally signed for

• You decide where the money goes and how it’s spent, unlike other mortgage options

• You’ll only be making one payment since the cost of your renovations will be rolled into your existing mortgage, which keeps things simple

Cons

• You could actually have a higher monthly mortgage payment depending on the interest rate you refinance into and the larger loan balance

• You could lose money when it’s time to sell because you took out equity when you refinanced

• Risk of foreclosure if you can’t handle the higher monthly mortgage payments

• The value of your home could stay the same; not all improvements are guaranteed to increase the value of your home

At the end of the day, switching things up in your home can be an exciting and beneficial decision. There are several ways to go about this, so be sure to do your own research when choosing a refinance option.

Disclosure of Relationship: 

LeadingRE provides advertising services to Veterans United pursuant to a RESPA-compliant advertising contract.  The publication of this blog post does not constitute an endorsement or recommendation of Veterans United by LeadingRE or its affiliated companies.  Please consult your own professional advisor in the selection process of any mortgage or other professional service provider.