Question:

How should a borrower read the cash-out refinance rates vs second mortgage rates?

Answer:

Cash-out refinance rates vs second mortgage rates can be difficult to understand and compare especially if you are a first time home buyer. Even for an experienced borrower it may be difficult to analyze different rates offered for a cash-out and for a second mortgage if they do not have a clear idea about how much cash they want and what this money will be used for. If you simply need $20,000 for a one-time urgent payment, it may be simpler to go with a second mortgage no matter how is the second mortgage APR compared to cash-out refinance rates.

If you need a total change of rates and seek much lower monthly payments (if your current mortgage was locked in on much higher rates and now rates are abruptly lower) you should consider a cash-out refinance even if you do not plan to go after the bag of cash. You may simply like to benefit from the cash-out refinance rates without utilizing the cash option to the full (or at all). In this case you will have to compare the first mortgage APR and the cash-out refinance APR, since the cash-out has significant closing costs.

In the case you are experienced in utilizing real estate equity as a source of cash or are capable of managing mortgages with the purpose of expanding your portfolio of investment properties, you probably have no interest in second mortgages at all.

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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