In the last year, home prices have risen 20%, according to statistics from home loan company Freddie Mac, but that doesn’t mean it’s a good time to refinance with a view to have more money in your account.
Experts believe that although the movements known as refinancing with cash withdrawal They can be very attractive, because they allow you to sign a new mortgage on your house and be able to use part of your capital in cash, it is not the best time to take that step. Calculate your VA mortgage loan on VA Loan Calculator online.
Recent data estimates that 14% of millennials (between 25 and 40 years old) who are homeowners are attracted to this financial movement as a possibility to pay for a good vacation or to indulge in some luxury, according to Bankrate.
This percentage is considerably high compared to 4% of generation X (41 to 56 years) and 3% of the baby boomers (57 to 75 years).
In a Bankrate survey, one in 10 millennial real estate owners said they would use cash on their home equity to finance non-essential purchases like a trip to Disney World, a cruise ship, appliances or even a boat.
“That was a flashing red light in the survey results,” Jeff Ostrowski, an analyst at Bankrate, tells Grow. “If you can’t afford these trips or items, don’t use your home equity – all the experts I’ve talked to say it’s a bad idea.”
Although refinancing is not a totally closed door, the success of this process depends fundamentally on how you use the influx of money.
What would be the really productive uses for your home equity according to the experts?
“The gold standard it’s home improvements, “says Ostrowski.” If you need a new roof, a new HVAC system, an electrical system needs to be replaced, anything that improves the safety or structural integrity of your home. “