Get Your Hands on some Cash
The best use for the extra cash is to pay off any higher-rate loans you may have. Let's say that you are carrying a $15,000
car loan at 10% and making minimum payments on a $10,000 credit-card balance at 17%. Your monthly payments on those debts would total $680. Then assume you refinanced your mortgage, taking out an additional $25,000 to pay
off your car and credit-card loans. Result: At 7.5%, your additional monthly mortgage payment would total only $175, so you would come out $505 ahead ($680Ð$175=$505).
Of course, all the extra cash needn't go for paying off debts. When the Smith's swapped their ARM for a fixed-rate last December, they also increased their mortgage load by $34,000, from $106,000 to $140,000. They used $3,000 of
the proceeds to pay their refinancing costs and another $17,000 to pay off a 10% home-equity loan, which had been costing them $250 a month. Then they spent the remaining $14,000 to build a garage for Roger's antique-car
collection -- and they did all this for just another $19 a month. One warning: When you decide to increase the size of your mortgage significantly, remember that if you default on
that loan you can lose your home. So be sure you don't spend the money frivolously or increase your overall debt load by running up your credit-card balances again. 
Another way to make low interest rates work for you is to refinance for more than the balance remaining on your old mortgage – in effect, tapping your home equity, or "cashing out,"
in lender speak. Thanks to favorable rates, you may be able to do so without boosting your monthly outlay. For example, at 8.5%, the payment on a $200,000, 30-year fixed-rate mortgage is
$1,538. But at 7.5%, that same payment lets you borrow nearly $20,000 more.
Shoreline Mortgage Corporation |
4000 Hollywood Boulevard
Holllywood, FL 33021
Toll Free (888) 353-1558
Phone (954) 966-1313
Fax (954) 966-3606
E-Mail
Loans@Shorelinemtg.com
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