Question:

How are cash-out refinance vs second mortgage compared?

Answer:

Cash-out refinance vs second mortgage is a dilemma for people who plan to refinance a mortgage with the purpose to acquire some cash in hand. If you are considering to refinance your home loan simply to get lower rates and lower monthly payments, you should stay with a second mortgage as cash-out refinance will be riskier.

The most basic difference is that a second mortgage offers you the benefit of lower rates and monthly installments, and the cash-out refinance offers you the same benefits plus some nice extra cash to spend as you please.There is also a difference in the closing cost - a cash-out refinance can cost as much as a first mortgage in closing costs, compared to second mortgages, where closing costs are much lower.

However, if the cash-out refinancing option presents you with lower rates, the higher closing costs will be compensated over time. A great advantage of the second mortgage is the convenience of quickly building equity on your home, and thus you have greater flexibility with borrowing money against it and repayment.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
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