Is it time for a Cash-Out Refinance for Your Arizona Home?

There was a reason you purchased your home. Whether location, school district, square footage, or a combination of these and other factors, you love your home. If you’ve lived there any length of time, there are likely renovations on your wish list. How do you pay for home improvement projects and still cover monthly expenses? It may be time to consider a cash-out refinance for your Arizona home. 

  • Call us to find out the current interest rates being offered. If rates are lower than your current interest rate, it may be a good time to refinance. A rule of thumb is if the interest rate is 50 basis points or a half percent lower, you should get significant savings by refinancing. 
  • If you are planning to stay in your home for 3-5 more years, cash-out refinancing to lower payments may make sense. Because of refinancing costs, you would need to stay in the home long enough to see savings offset the costs. 
  • Improved credit and cash. If you are earning more money since you closed your first mortgage, cash-out refinancing may give you a better interest rate and lower monthly payments. Putting cash down on a refinance will also lower interest and thus the cost of the loan over time.

Before filling out an application for a cash out refinance of your Arizona home, here is what you need to know.

Know the amount owed on the current mortgage.

Understand your credit. Get a free credit report from Take care of errors and disputes, establish a payment history, and pay off debts. Contrary to what you might believe, do not close credit accounts as they measure the longevity of your credit history and can impact your ability to refinance. Instead, pay down debts and leave the accounts open.

Calculate total income and debts. When we review cash out refinance applications, we take the debt to income ratio into consideration. Most lenders prefer 50% or less for debt to income ratio. If income is $2,000 per month, total monthly expenses should be $1,000 or less.

Calculate the amount of available credit being used. Lenders look for 30% or less, making it important to pay down credit cards and other debts. If you have $10,000 available and use more than $3,000, you may want to implement a debt payoff strategy prior to applying to refinance your Arizona home.

Understand the closing costs of a refinance which our team can help determine for you.

Family on Floor in Arizona Homes

Other reasons to refinance...

In addition to savings on monthly payments, homeowners use cash-out refinancing for home improvements. The most common that also yield a high return on investment include:

  • Curb appeal improvements like updating the garage door and painting the house.
  • Kitchen and bathroom remodel. Keeping the same floor plan but updating appliances, fixtures, and countertops, and refacing cabinets is a great way to add value.
  • Energy-efficient windows and doors save money on utility bills while making the home more appealing to prospective buyers when you’re ready to sell.

Is it time for a cash-out refinance for your Arizona home? Contact our team and get the process started today!