- Cash out Refi-Refinancing fights Inflation using fixed-rate for debt attractive. Many people overlook this valuable feature of debt. If you get a 30-year, fixed-rate mortgage, your mortgage payments over the lifetime of the loan actually get cheaper in terms of real dollars. As inflation continues over those 30 years, you’re making payments with dollars that are worth a little bit less each year. Inflation is a smart debtor’s best friend. Our analysis shows inflation is not a risk right now but may be in the future. Without inflation, leveraging this debt can be a win. But if there isinflation, this could become a home run.
- Borrowed equity is tax-free, and interest is tax-deductible. Borrowing the equity in your house also provides several tax advantages. First, the equity you borrow is not taxed because it is borrowed. Second, the additional interest you pay on your mortgage is tax-deductible, making your effective borrowing cost even lower.
- Having liquidity creates opportunity Using Cash out Refi-Refinancing. Having cash or quick access to cash allows you to take advantage of opportunity when it comes your way. This is especially true in an economy recovering from Covid-19 because there are opportunities in distressed or discounted assets on the horizon, among other things.
