A Mortgage "Cash In" Refinance

Never heard of this before, "Mortgage Cash In?" Well, I can't say that I have either, meaning this product type, (and there isn't one that is named this), but you can do it.  I saw this printed somewhere as a topic with the "Cash In" words, and it made so much sense and I thought it a good idea to elaborate on.

What do these words mean? "Cash In?" This means that the mortgage applicant is bringing money to the table when the loan closes instead of getting the "cash out" of years past. Why is the "Cash In" mortgage a better deal? Well, this previous underwriter is about to tell you and you can then form your own opinion about the refinance Mortgage Cash In.

Why is it actually a good thing to bring money to the table for a refinance and why are so many people who are constructively looking at their financial position and credit obligations doing this now?

1. First you can reduce the principal of your loan if you are paying a principal reduction.
2. Next you are paying less interest as your principal balance is less.
3. Next you will pay off your loan quicker.
4. Next you are not adding back the closing cost which makes your principal balance more than it was; if you do not pay the closing cost out of pocket.
5. Next you are keeping and building your equity in your loan when you pay the principal reduction and the closing cost of a refinance.
6. Next you are giving yourself financial freedom when you will need it some years down the road.

What a principal reduction can help do:

• eliminate mortgage insurance
• give you the ability to get a 20 or 15 year term instead of a 30
• builds equity position
• saves you money monthly
• gives you the opportunity to save more for retirement

Your question might be now; what about the tax advantage? So many only have standard deductions anyway, unless of course they have the child credits etc. If it is a sizable amount of interest yearly; then it is still up to the person and they must decide which will bring them the best results but.....

With the economy as it is; most individuals who are conscious of becoming more secure financially; are working diligently to make sure their later years are reasonably comfortable. They are looking at ways to reduce their entire debt and not prolonging it just to have an immediate amount of money at tax time (which so many do nothing with but spend, if they get a refund) because most of us know that anything can happen in these insecure times. There is not a lot of job security anymore, I think that we have all found that out. We do not want to be fearful but less debt is less troublesome should there come a reduction in job force for anyone.

The question should be this: Why would anyone not want to take advantage of these low mortgage rates to pay down their mortgage. The rates will eventually rise and there will not be the opportunity that now exist. If ones financial position deteriorated and the equity they had were needed; there is always the possibility of another refinance to get the funds needed. But...this should not be the emphasis. The emphasis should be in gaining full control over long term debt and the ability to have as few and low monthly payments as possible; giving one more control over their current financial situation. Paying the closing cost on a refinance is important also as this can in most cases make the principal balance increase and therefore it takes a number of years to pay this off and get back to paying the principal balance that existed prior to the refinance.

It is a matter of personal preference, assets available, present financial situation, ones own personal view of how they prefer to live their life in their retirement years. Having a mortgage loan when 65 years of age is not the most desirable thing to have; unless of course you are wealthy. Not that many of us are...

This is what so many applicants are doing now and who seeem not to be thinking clearly about long term debt. They want to borrow the money and pay off their other credit obligations, such as credit cards. I agree that credit cards with high interest rate are a downfall of our country and it is always wise to eliminate these if possible. It is well and good, but how about cutting the credit cards up so that 2 years down the roads one is not in the same position as they were at the closing of the "cash out" refinance? Is this refinance going to help you presently and in the future? Are you actually thinking about your ability to survive should something of a disaster occur like loosing a job? Question your motives and make sure you are getting "cash out" for good reasons. To have extra money on hand is not a good reason because it will be spent on things which one could probably do without.

Debt consolidation is not always bad, but it is neither always good. The purpose to make ones financial position better not worse and so much of the time we have seen applicants continuing to come back for another refinance. This is not gaining financial security and in fact it is destroying it. In our economic times it is relevant to consider paying down a mortgage instead of increasing it. With the rates historically low it is more important to decrease ones debt than to prolong it. If that can be done for the long term that is wonderful.