According to the National Association of Realtors, parents gifting money to their children to help purchase a first home is a common experience. Gifting money is a type of down payment assistance that can help them realize their dreams of homeownership.
Refinancing Your Mortgage To Help With Holiday Bills: A Good Idea?
The holidays are a stressful enough time with family obligations, parties, purchasing the right gifts for loved ones, and balancing your finances. After big sales holidays like Black Friday and Cyber Monday you may be anxiously checking your bank account and scrambling to pay both holiday bills and monthly commitments such as your mortgage.
You may have heard advice on the radio or from friends and family about refinancing your mortgage and using that extra cash to help with holiday bills.
But is it a good idea?
Does Refinancing Make Financial Sense?
Remember that you should never refinance your home just for the sake of refinancing, hoping that it will be the magic bullet that will save you some cash for your holiday bills.
- Your home must have built up enough equity
- You must have made monthly mortgage payments on time
- You are not close to paying off your mortgage
- You can afford the associated fees
When done at the right time, refinancing can save you money and put some in your pocket, but if you cannot pay fees like closing and application costs or do not have enough home equity refinancing is not a solid financial choice.
What About Cash-Out Refinance?
We already know that many homeowners already use cash-out refinances to finance their home remodel, update, or replace old appliances. This alternative to a home equity loan allows you to keep the cash generated from refinancing your mortgage for more than what you owe.
You can then use that cash to pay off credit cards and other bills at your discretion. This is not “free” cash so use it responsibly.
Remember that by taking a cash-out refinance, you are losing equity in your home.
Always Speak To Your Lender
It goes without saying that you should always consult with your lender to find the right solution for you and your needs. An experienced, qualified agent like those at SmartMortgage will walk you through the steps of refinancing your home.
Refinancing your home to pay off holiday bills is possible and not uncommon. Just be sure that you are refinancing for the right reasons and have the home equity and cash available to do so.