Cash-Out Refinance Mortgage Loan Eligibility Guidelines

This guide covers cash-out refinance mortgage loan eligibility guidelines. Government and Conventional loans offer cash-out refinance mortgage loan programs. Home values have been skyrocketing during the past few years where many homeowners are sitting on substantial equity in their homes. HUD, the parent of FHA allows up to an 80% LTV on cash-out refinance mortgage loan on FHA loans. The Department of Veterans Affairs will allow up to a 100% LTV on cash-out refinance  mortgage loan on VA loans.

homeowners with equity in their homes are eligible for a cash-out refinance mortgage loan. The proceeds of cash-out refinance mortgage loan is not taxable and can be used for any purpose for the borrower.

Fannie Mae and Freddie Mac allow up to an 80% LTV on cash-out refinance on conventional loans. Since the real estate and banking collapse of 2008, cash-out refinance mortgage loan have not been too popular. This is because most homeowners have lost a large portion of their equity in their homes. For those who need cash-out refinance mortgage loans, Gustan Cho Associates can offer cash-out refinance mortgage loan programs that will suit your needs. In this guide, we will discuss cash-out refinance mortgage loan eigibility guidelines and its benefits.

Is  Cash-Out Refinance Mortgage Loan a Good Idea

There are many reasons why homeowners seek cash-out refinance mortgage loan. Most of them get cash-out refinance mortgage loan because they want to pay off their high-interest credit cards, automobile loans, installment loans, or student loans. Others get cash-out refinance mortgage loan because they want to do home improvements, build an addition to their home, or have extra cash for a wedding, vacation, or investment purposes. Still, others get cashout refinance mortgage loans to purchase a vacation or second home. Whatever the reason, there are terms to consider before acting on getting cash-out refinance mortgage loan.

What Are The Rules For a Cash-Out Refinance Mortgage

A cash-out refinance mortgage loan is a financial strategy where you refinance your existing mortgage for an amount greater than what you currently owe and pocket the difference in cash. Before proceeding with a cash-out refinance, you need to determine the equity you have in your home. Equity is the difference between the value of your home and the amount owed from the mortgage. You apply for a new mortgage larger than your existing one. The lender will consider your credit score, income, and the appraised value of your home to determine the new loan’s terms.

How Much Can I Borrower With a Cash-Out Refinance

Most cash-refinance mortgage, with the exception of VA loans, borrowers can borrower 80% loan-to-value. VA loans allow up to 100% loan-to-value on cash-out refinance. There are closing costs on cash-out refinance mortgage loans which is taken out of the proceeds. Similar to the initial mortgage process, closing costs involve a cash-out refinance. These can include appraisal fees, title search fees, and other administrative expenses.

How Much Equity Do I Need For a Cash-Out Refinance?

You can secure a lower interest rate or change the duration of the loan. Once the new loan is approved and finalized, you receive the difference between the new loan amount and the remaining balance on your original mortgage in the form of cash. You now have a new mortgage with different terms and a higher principal balance. You’ll make monthly payments based on the new loan terms, which may include both principal and interest.

People often pursue cash-out refinances for various reasons, including home renovations, debt consolidation, or investment opportunities.

It’s important to carefully consider the costs and potential risks involved, such as extending the repayment period and potentially increasing the overall interest paid over the life of the loan. Your loan officer will help determine if a cash-out refinance is g financial goals and circumstances.

Term and Rates on Cash-Out Refinance Mortgage Loan

If you are shopping for cash-out refinance mortgage loan, there are conditions that you need to consider. Most mortgage bankers or banks do not do cash-out refinance mortgage loan. If you are interested in cashout refinance mortgage loan, you should consult with a loan officer. Mortgage companies have dozens of correspondent lenders. They should have investors who cater to cash-out refinance mortgage loan. One of the things that you should realize is that mortgage rates will be higher for cash-out refinance loan.

Lenders will hit you with an adjustment just for being a cash-out refinance mortgage loan. Most lenders prefer a 80% loan-to-value on cash-out refinance loan.

However, there are mortgage lenders who will go up to 80% loan-to-value on cas-out refinance loan. There are a few lenders that will even go up to an 80% loan-to-value on cashout refinance mortgage loan. You must remember that the higher your loan to value is, the higher your mortgage rate will be. On cash-out refinance mortgage loan higher than 80% loan-to-value, private mortgage insurance premiums apply.

Many homeowners have equity in their homes where they qualify to do a cash-out refinance and get substantial cash from their equity in their homes.

Homeowners with equity in their homes who are in an active Chapter 13 Bankruptcy repayment plan can do a cash-out refinance mortgage  with an FHA or VA loan and pay off the balance of the Chapter 13 bankruptcy debt. The Chapter 13 Bankruptcy does not have to get discharged to qualify for an FHA or VA cash-out refinance mortgage.  It does need to be a manual underwrite.

Loan-to-Value on FHA And VA Cash-Out Refinance During Chapter 13 Bankruptcy Repayment

The maximum loan to value on an FHA cash-out refinance is 80% LTV and borrowers can do up to a 100% LTV cash-out refinance mortgage loan on a VA loan. If you are getting an FHA or VA refinance or purchase loan during the Chapter 13 Repayment plan, you need to have been in the repayment plan for at least 12 months and need trustee approval.

The bankruptcy trustee will normally approve a purchase, refinance, or cash-out refinance during the Chapter 13 Bankruptcy repayment plan.

There is no waiting period after the Chapter 13 Bankruptcy discharged date to obtain an FHA or VA purchase, refinance, or cash-out refinance. However, if the Chapter 13 Bankruptcy has not been seasoned for at least two years, it needs to be a manual underwrite.

Cash-Out Refinance Mortgage For Investment Properties

If you own second or vacation homes, you can still do a cash-out refinance. Depending on mortgage lenders, most mortgage lenders might have tighter restrictions on second homes, vacation homes, and investment homes. Gustan Cho Associates are experts in Condotel purchase and refinance mortgage loans. With condotel refinance loans, the condotel lender will go up to 75% loan-to-value on regular rate and term condotel refinancing without a cashout. However, the maximum loan to value on a cashout refinance loan is restricted to 60% loan-to-value.

Loan-to-Value Cash-Out Refinance Mortgage Loan Guidelines

Equity is key in determining how much cash out homeowners can get. Here is the loan-to-value requirements on the particular loan programs:

• HUD allows up to 80% LTV on FHA loans
• USDA does not allow cash-out refinance loans
• VA allows up to 100% loan to value
• Fannie Mae and Freddie Mac allow up to 80% cash-out on primary residences and 75% LTV on investment properties
• Non-QM Loans allow up to 80% LTV on owner occupant properties and 75% on investment properties

For more information on this blog or other mortgage topics, please contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.