CBS News
3 big benefits of cash-out refinancing to know now
Getty Images/iStockphoto
In today’s economy, with cooling but still stubborn inflation and higher interest rates meant to combat it, many Americans may find themselves looking for new ways to help make ends meet. Relying on traditional products like credit cards and personal loans can be costly currently thanks to double-digit interest rates on both. Homeowners, however, have a safe and reliable option at their disposal right now: their home equity.
While home equity loans and home equity lines of credit (HELOCs) are two of the most popular ways to tap into your home equity, there are also major benefits to accessing it via a cash-out refinance. This involves taking out a new mortgage loan for an amount larger than what you currently owe. Owners then use the new loan to pay off the old one and keep the difference between the two as cash that they then pay back to their lender.
The cash obtained this way can be used for a variety of reasons ranging from home repairs and renovations to financing major expenses like weddings or college. Or it can help you resolve some of your existing debt. But there are other major benefits to cash-out refinancing to know now. Below, we’ll break down three of them.
Learn more about how cash-out refinancing can help you here now.
3 big benefits of cash-out refinancing to know now
Here are three major advantages to a cash-out refinance to understand today.
Access to a large sum of money
If your financial situation has been hurt in recent years then access to a large sum of money can be beneficial right now. While you’ll generally be limited by how much you can borrow with a credit card or personal loan, a cash-out refinance can result in access to tens of thousands or even hundreds of thousands of dollars, depending on how much equity you have in your home at the time of application.
Most lenders will allow you to borrow as much as 80% of that equity. That said, you should carefully examine your needs and goals before proceeding as your home will serve as the collateral in these circumstances.
See how much you can access with a cash-out refinance today.
The interest rate may be lower than the alternatives
While refinance rates are higher now than they were in recent years (currently at 7.28% for a 30-year traditional refinance) and may be slightly higher for a cash-out refinance, they’re still markedly better than popular alternatives. Credit card rates right now are 20% or higher and personal loans are often in the double-digit range, too. Refinance rates are lower than both alternatives, giving you more flexibility to pay back the cash you borrowed.
You may qualify for tax deductions
One major benefit of using home equity loans and HELOCs is the interest tax deduction if the funds are used for eligible home repairs and renovations. But that same benefit extends to cash-out refi loans, too, if used for eligible purposes. Plus, any money withdrawn from your accumulated home equity won’t count as income, so you won’t have to pay taxes on any cash received.
As is the case with tax implications, however, it’s smart to consult a tax professional in advance to better understand how a cash-out refinance could affect your tax bill.
The bottom line
There aren’t many viable ways to access large sums of cash without getting saddled with a burdensome interest rate right now but a cash-out refi loan can help. By pursuing this unique form of financing homeowners can potentially secure much more money than they would have with some other options and they’ll likely pay a lower interest rate to do so. And they may qualify for some advantageous tax benefits that are simply not available with other products. For all of these reasons, homeowners should consider the benefits of cash-out refinancing now and consider acting to get their finances back on track.
The International Brotherhood of Teamsters says workers at seven Amazon facilities will begin a strike Thursday morning in an effort by the union to pressure the e-commerce giant for a labor agreement during a key shopping period.
The Teamsters say the workers, who authorized walkouts in the past few days, are joining the picket line after Amazon ignored a Dec. 15 deadline the union set for contract negotiations. Amazon says it doesn’t expect any impact on its operations during what the union calls the largest strike against the company in U.S. history.
The Teamsters say they represent nearly 10,000 workers at 10 Amazon facilities, a small portion of the 1.5 million people Amazon employs in its warehouses and corporate offices.
Amazon is ranked No. 2 on the Fortune 500 list of the nation’s largest companies.
At a warehouse in the New York City borough of Staten Island, thousands of workers who voted for the Amazon Labor Union in 2022 and have since affiliated with the Teamsters. At the other facilities, employees – including many delivery drivers – have unionized with them by demonstrating majority support but without holding government-administered elections.
The strikes happening Thursday are taking place at an Amazon warehouse in San Francisco and six delivery stations in southern California, New York City, Atlanta and the Chicago suburb of Skokie, Illinois, according to the union’s announcement. Amazon workers at the other facilities are “prepared to join” them, the union said.
“Amazon is pushing its workers closer to the picket line by failing to show them the respect they have earned,” Teamsters General President Sean M. O’Brien said in a statement.
“If your package is delayed during the holidays, you can blame Amazon’s insatiable greed. We gave Amazon a clear deadline to come to the table and do right by our members. They ignored it,” he said.
The Seattle-based online retailer has been seeking to re-do the election that led to the union victory at the warehouse on Staten Island, which the Teamsters now represent. In the process, the company has filed a lawsuit challenging the constitutionality of the National Labor Relations Board.
Meanwhile, Amazon says the delivery drivers, which the Teamsters have organized for more than a year, aren’t its employees. Under its business model, the drivers work for third-party businesses, called Delivery Service Partners, who drop off millions of packages to customers everyday.
“For more than a year now, the Teamsters have continued to intentionally mislead the public – claiming that they represent ‘thousands of Amazon employees and drivers’. They don’t, and this is another attempt to push a false narrative,” Amazon spokesperson Kelly Nantel said in a statement. “The truth is that the Teamsters have actively threatened, intimidated, and attempted to coerce Amazon employees and third-party drivers to join them, which is illegal and is the subject of multiple pending unfair labor practice charges against the union.“
The Teamsters have argued Amazon essentially controls everything the drivers do and should be classified as an employer.
Some U.S. labor regulators have sided with the union in filings made before the NLRB. In September, Amazon boosted pay for the drivers amid the growing pressure.
NEW YORK — The Teamsters union is launching a strike against Amazon at numerous locations across the country, including in Maspeth, Queens.
The Teamsters are calling it the largest strike against Amazon in United States history, and it’s set to begin at 6 a.m. Thursday. In addition to New York City, workers will be joining picket lines in Atlanta, Southern California, San Francisco and Illinois.
In a video announcement released Wednesday night, workers voiced their frustrations.
“Us being strike ready means we’re fed up, and Amazon is clearly ignoring us and we want to be heard,” one worker says in the video.
“It’s really exciting. We’re taking steps for ourselves to win better conditions, better benefits, better wages,” another worker in the video says.
The union says it represents about 10,000 Amazon employees and that Amazon ignored a deadline to come to the table and negotiate. The $2 trillion company doesn’t pay employees enough to make ends meet, the union asserts.
At the height of the holiday season, many are wondering what this means for packages currently in transit.
Teamsters President Sean O’Brien said, “If your package is delayed during the holidays, you can blame Amazon’s insatiable greed.”
Amazon says Teamsters are misleading the public
An Amazon spokesperson says the Teamsters are misleading the public and do not represent any Amazon employees, despite any claims.
“The truth is that the Teamsters have actively threatened, intimidated, and attempted to coerce Amazon employees and third-party drivers to join them, which is illegal and is the subject of multiple pending unfair labor practice charges against the union,” the spokesperson said in a statement.
An Amazon representative says the company doesn’t expect operations to be impacted.
Watch CBS News
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.