If you’re in need of extra cash, choosing the right financing option can make a big difference in your monthly payments, total interest costs, and long-term financial health. For homeowners, two popular options are cash-out refinancing and personal loans. Let’s take a look at each loan to find out which one is the right fit for you.
What Is A Personal Loan?
A personal loan is an unsecured loan that provides a lump sum of cash, typically repaid in fixed monthly installments over a set term. Because it’s unsecured, it doesn’t require collateral like your home. Some benefits of a personal loan include fast funding, flexible use since the funds can be used for anything, and fixed monthly payments that make budgeting easier; however, there are some things to consider. Interest rates on personal loans are often significantly higher than mortgage rates. That means you could be paying back more money in interest than you would with a cash-out refinance loan.
What Is A Cash-Out Refinance?
A Cash-Out Refinance replaces your current mortgage with a new one, often at a lower fixed rate, giving you the difference in cash. By making your monthly mortgage payments, you build equity in your home and can use that cash for anything you need including consolidating high-interest debt from personal loans or credit cards and reducing the amount you pay in interest over time. At AmeriHome, we provide a Free Mortgage Checkup to see how much cash you could get with a cash-out refinance loan.
The best choice depends on your financial goals, timeline, and how much equity you have in your home. If you’re interested in maximizing your savings and minimizing your total interest, contact your AmeriHome Home Loan Expert to see if a cash-out refinance is a good option for you.
At-A-Glance: Personal Loan vs. Cash-Out Refinance
| Comparison Point | Personal Loan | Cash-Out Refinance |
|---|---|---|
| What it does | Unsecured borrowing where you receive a fixed amount of cash that is repaid over time in regular installments | Replaces your current mortgage with a new loan and gives you the difference in cash using your home equity |
| Interest rate | Typically, much higher | Typically, much lower |
| Loan amount | Lower borrowing limits | Higher amounts based on equity |
| Loan term | Shorter (2–7 years) | Longer (10–30 years) |
| Monthly payments | Higher due to shorter term | Lower due to longer term |
| Best for | Smaller, quick expenses | Large expenses, home improvements, or paying off debt |
Looking to start saving today on your home loan? Let’s upgrade your mortgage and put money back in your wallet with a new Purchase or Refinance Loan.*
6 Money-Saving Tips To Start Today:
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Pay Off Your Loan Sooner Switch to shorter loan terms to save on interest.* |
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Lower Your Monthly Payment Refinance with longer terms, so more money stays in your wallet.* |
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Consolidate Debt Cash-out to reduce high-interest credit card debt. |
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Pay For Larger Expenses Invest in your home with updates that will yield a higher return should you decide to sell in the future. |
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Get Extra Savings After you have financed a home with us once, save up to $750 on all your future refinances and new home purchase loans with your AmeriWallet Benefits.** |
If you are interested in learning more about how a refinance or new home purchase loan can benefit you, just give us a call at 877.715.9908 or get your instant rate quote here.
Imagine The Possibilities With Your Better Home Loan!
*By refinancing, your total finance charge could be higher over the life of the loan.
**As a member of the AmeriHome family, borrowers are part of the AmeriWallet Rewards program. If you completed a home loan with us once, you will qualify for a $750 lender credit for all of your future refinances or home purchases done with AmeriHome, for any property you own. To qualify for this offer, you must have previously financed the purchase of a home or refinanced with AmeriHome. You have financed with AmeriHome when AmeriHome Mortgage Company, LLC appears on the previous Promissory Note for your loan, and you are listed as a borrower on the Note. Credits will be applied only if your loan closes with AmeriHome. This offer can not be combined with any other offers and is not applicable for FHA Streamline, or VA IRRRL Refinance transactions. Other restrictions may apply. Terms and conditions are subject to change. AmeriWallet Rewards program is subject to termination without notice.
