Friends. I keep getting emails from my mortgage company offering a chance to pull from my 30k+ equity. How does that work? What happens if I try and cash it out?
In: Economics
You pay interest on the amount you pull out. Typically home equity loans or lines of credit work as interest only loans for a period of time before you begin paying down the principal, too. And any outstanding balance is reduced from proceeds if/when you sell.
If interest rates are falling, you could also do a cash out refinance, where you get money but the refinanced mortgage is more than you owed on previous one. When rates were falling, somebody might have been able to go from a 5% mortgage to a 3% one, pull out $50k and still have payments remain the same because of interest rate. With high rates, you wouldn’t want to go cash out refi route.
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