If you own a real estate property, you may be caught between refinancing your mortgage or selling your house for cash. Above all, one major factor in deciding between the two is affordability. To know which suits you more, let's look into refinance vs. sell house for cash: which is better?
Refinancing Your House
So how does refinancing works? Basically, you're refinancing your house when you change your existing mortgage to a newer mortgage. More often than not, the trade with the newer mortgage usually comes with a different interest and principal.
The lender uses the new mortgage to pay the existing one in refinancing. Thus, it leaves the homeowner with one loan to pay every month.
There are three benefits of refinancing. First, you can shorten your loan term. For instance, you can change your 30-year loan term to 15-year. This way, you are paying less with a better interest rate than the initial longer term.
Second, you can get a better interest rate when you refinance. For example, you can refinance your mortgage if the current interest rates are better or lower.
Third, you can gain more money through cash-out refinance. This is possible when the value of your house goes up, giving you sufficient equity that you can cash out.
Sell House For Cash
There are many situations wherein selling your house maybe your best option than refinancing. First, the time may come when your home no longer meets your daily needs. Perhaps, buying another home may be the solution to meet your needs. Take relocation due to work or a growing family as the best examples of this situation. Therefore, this option is beneficial if you're thinking to move location. It is the best way to sell house and buy another.
If you need to sell house quickly, you can check out Katy and Frank. We buy houses as is for cash, and we specialize in buying damaged or unwanted homes.
The second is the so-called equity. Equity is the amount that has been paid in the loan. Additionally, equity is what you own in your home free from mortgage. You can take advantage of your equity and move out when the market price increases. You can use the equity to pay off debt or other miscellaneous fees in your new home.
Third, your current income may no longer afford your existing mortgage. Hence, you can sell house for cash than refinancing. Consequently, you can choose a new place that is more appropriate for your income and budget. You can save more with cash for houses instead of refinancing in this scenario.
Refinance Vs. Sell House For Cash: Which is Better?
Purchasing a home is a great asset and investment. If you decide to sell house for cash or refinance, you can leverage both depending on your needs.
If you want to refinance your house, note that it may take longer. But with the mortgage rates being low last year, this option has gotten the attention of many homeowners.
On the other hand, selling your house for cash and moving to another home can be favorable for you for many different reasons. You have the chance to pay better interest rates and reduce your loan when you relocate. Katy and Frank can help you with a convenient and faster way of selling your home. We guarantee you our best price offer and transparency throughout our transactions.
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