Cashback Mortgage

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Is A Cashback Mortgage Worth It?

Getting cashback from your mortgage is not uncommon, even in today’s market.  The concept is that you get a mortgage to cover the money you do not have for the purchase of the property and receive a check from the lender for X amount.  It’s not a kickback, which would be illegal, but a refund of your money that you are in essence borrowing.  Remember, the banks give nothing away.  Everything they do is geared to extract money from the borrower. It is a simple process added on to the mortgage paperwork.  For example, you are about to refinance your home that is valued at $300,000.  You currently owe $180,000 on your old mortgage that you took out when you purchased the home 9 years ago.  The value of your home has appreciated and you want to refinance for $210,000.  The difference between what you owe and the new mortgage is $30,000.  After deducting closing costs, points etc.  You may get a check from the bank for $20,000. The only time you want to do this is if you have a better use for the extra $20,000.  A better alternative is to pay down and eliminate your mortgage altogether.

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