Is It Worth It to Cash Out Refinance in Illinois?

Do you own a home in the state of Illinois? Are you interested in tapping into its equity? Are you considering a cash-out refinance?

As you come to understand the finer details of a cash-out refinance in Illinois, you’ll realize that it can benefit you in many ways.

A cash-out refinance allows you to borrow more than your existing loan amount and accept the difference in cash. This difference is provided to you in a lump sum and it can be used however you see fit. 

Save for a few hiccups, home prices in Illinois have steadily appreciated over the past 40 years. If you own a home in the state, there’s a chance that you have enough equity to qualify for a cash-out refinance. 

Reasons to apply for a cash-out refinance in Indiana

A cash-out refinance is a big financial decision that you don’t want to take lightly. Before you do anything, familiarize yourself with these three reasons to apply and how they could benefit your situation. 

You could lower your interest rate

Compare your current mortgage rate against what you qualify for. If it’s lower, you’re able to save money every month and over the life of your loan. For some people, this works out to savings of thousands of dollars.

Potentially boost your credit score

A cash-out refinance provides you funds to pay off and/or consolidate debt. With that, your credit score is likely to increase. 

Interest could be deductible

Talk to your tax professional about whether you can deduct mortgage interest payments. 

What can you use the cash for?

The primary purpose of a cash-out refinance is to gain access to the equity in your home. You can use this money in various ways, such as the following common reasons.

1. Home renovation project

Most homeowners have at least one home renovation project on their to-do list. Examples include finishing a basement or attic space, renovating a kitchen or bathroom, and adding a deck or patio. 

All of these projects, among others, are costly. Using the funds from a cash-out refinance may be the most affordable approach.

2. Debt consolidation

The more debt you have the more difficult it is to balance. Rather than pay on multiple loans every month, use a cash-out refinance to consolidate them. This will save you time and potentially money. 

3. Wedding or honeymoon

Are you getting married? Do you need money for a honeymoon? Do you want to throw a wedding for a loved one?

Funds from a cash-out refinance can be used for major life events, like a wedding, as well as travel. 

4. Education expenses

This includes expenses such as college tuition, books, and school supplies. 

5. Start a business  

Don’t let a lack of cash derail your dream of starting a business. Calculate how much money you need and then determine if you can secure it through a cash-out refinance. It’s a good way to let your home’s equity build you a better life. 

How a cash-out refinance works in Illinois

Imagine that your home has an assessed value of $400,000 with a balance of $200,000. A cash-out refinance would leave you with a lump sum of up to $120,000. 

Tip: Ask your lender how much money you can borrow via a cash-out refinance. Most financial institutions cap it at 80% of your home’s assessed value. 

Things to know about Illinois

If you’ve lived in Illinois, you know that there’s a lot to like. From condos in Chicago to single-family homes in small towns to farming communities, there’s no shortage of places to call home in the Prairie State. 

Some facts about Illinois include:

• It has the fifth-largest gross domestic product (GDP) in the United States
• It’s the 6th-most populous state
• It’s the 25-largest state by area
• Three U.S. presidents were elected while living in Illinois: Abraham Lincoln, Ulysses S. Grant, and Barack Obama

Why Illinois is a prime area for a cash-out refinance

No matter your current situation, there are several ways to build equity in your home:

• Continue to make regular mortgage payments
• Make additional principal payments
• Wait for home values to increase

If you are ready to tap into your existing equity, AAA Banking can help you do so. 

How can I qualify for a cash-out refinance?

Your lender can walk you through the process of applying for a cash-out refinance. While doing so, you’ll learn more about general eligibility requirements such as:

• A minimum of 20% home equity
• A credit score of approximately 620 or higher

These requirements may vary from lender to lender, so check with your loan officer to learn more. 

Applying for a cash-out refinance in Illinois

If you’re interested in learning more or taking the first step in the application process, contact the professionals at AAA Banking. 

For those who are shopping for a new home, our HomeScout home search program can act as your guide. Quickly browse millions of home listings from the MLS, receive pre-approval, and connect with a local real estate agent right on the app.

No matter what’s on your mind, we’re here to provide you with professional guidance. 

Apply online today, or call us at (844) 897-2265 M-F; 8a-8p EST. Either way, one of our experienced loan officers is standing by to answer your questions.

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