2016 Cash-Out Refinance Guidelines Explained

Updated 2016 Cash-Out Refinance Guidelines

2016 Cash-Out Refinance Guidelines depends on the type of mortgage loan programs the mortgage borrower selects. Loan to value is the key when it comes to cash-out refinancing. FHA and Conventional Loans are the most popular mortgage loan programs in the United States. There are loan to value requirements and seasoning requirements when it comes to cash-out refinances for FHA Loans and Conventional Loans. The key when it comes for cash-out refinancing is to find out what your property is worth. Housing prices in many parts of the country have been appreciating in recent years, especially in many parts of Florida, California, Illinois, Texas, Alabama, Virginia, Georgia, Ohio, Tennessee, Kansas, Nevada, and Arizona. Many homeowners in California have seen their homes appreciate more than 30% in the past three years and many homeowners in Florida have seen their home values appreciate equally as much if not more. Texas is a booming state where many homes are under contract the day it is listed. In the Miami-Dade area and Palm Beach County and Broward County, real estate demand is so high that many home sellers are not offering sellers concessions  to home buyers anymore. Many homes in areas where the demand is higher than the inventory of homes that are listed on the market, homes are selling over the listing market price and home buyers are willing to purchase the home over the appraised value. The increased demand for homes versus the housing inventory out there is creating an increase in home values throughout the country. This is good for homeowners who are looking for a cash-out refinance mortgage on their homes so they can use the extra cash to do home improvement, pay off credit card debt, use it for a down payment on an investment property, or use it for personal or other means.

2016 Cash-Out Refinance Guidelines: FHA Loans

A home buyer who purchased a home with a FHA Loan is eligible to do a rate and term FHA refinance mortgage loan after he or she has made six monthly timely mortgage payments on their FHA insured mortgage loan. However, to be eligible to do a cash-out refinance mortgage on a FHA Loan, the homeowner needs to have made at least 12 months timely payments on their FHA Loan. There is a six month waiting period to do a rate and term refinance on a FHA Loan and there is a 12 month waiting period to do a cash-out refinance mortgage loan on a FHA Loan. The maximum loan to value on a FHA Cash-Out Refinance Mortgage Loan is 85% LTV. This is possible for homeowners who purchased their home with a lot of down payment or homeowners who have had their homes appreciate substantially. The United States Department of Housing and Urban Development, also known as HUD, is the parent of FHA and they are the governmental entity that sets FHA Guidelines On Cash-Out Refinance Mortgages as well as all other FHA mortgage lending guidelines.

2016 Cash-Out Refinance Guidelines: Conventional Loans

Fannie Mae and Freddie Mac are the two mortgage giants in the United States that sets mortgage lending guidelines for Conventional Loans. Conventional Loans is also often called Conforming Loans because they need to conform to Fannie Mae and/or Freddie Mac mortgage lending standards. Fannie Mae and Freddie Mac require a six month seasoning requirement for a Conventional mortgage loan borrower to be able to refinance their home loan into a Conventional Loan. The 2016 Cash-Out Refinance Guidelines on Conventional Loans is that the mortgage borrower need to wait six months from their home purchase in order to do a cash-out refinance mortgage, which is the same as with a rate and term refinance unlike on FHA Loans, the rate and term refinance waiting period is 6 months and the FHA cash-out refinance period is 12 months seasoning requirement. The loan to value requirement is 80% LTV on a Conventional Loan cash-out refinance mortgage where the loan to value is capped at 85% LTV on FHA Loans.

2016 Cash-Out Refinance Guidelines: Other Mortgage Loan Programs

You can also do cash-out refinance mortgage loan on Jumbo Mortgages. Jumbo Mortgage Loans are called non-conforming loans because they do not conform to Fannie Mae and/or Freddie Mac mortgage lending guidelines because their loan limits exceed the maximum Conventional mortgage lending limit of $417,000. Most Jumbo mortgage lenders will only do a cash-out refinance of up to 75% LTV, however, there may be Jumbo mortgage lenders that may do a 80% Loan To Value cash-out refinance mortgage loan on a Jumbo mortgage. Jumbo loans have higher credit standards and lower debt to income ratio requirements than Conventional Loans and other mortgage loan programs due to the risk the mortgage lender takes on lending on a higher end property.

USDA Loans will only allow rate and term refinances and will not allow cash-out refinance mortgage loans. Homeowners with a current USDA Loan who have substantial equity in their homes and need to do a cash-out refinance mortgage may need to do a cash-out refinance mortgage with either a FHA Loan or Conventional Loan or VA Loan ( if the borrower is a veteran and meets VA mortgage lending guidelines ).

The United States Department of Veteran Affairs is the governmental agency that is in charge of VA Loans. VA Loans is hands down the best mortgage loan program available, however, VA Loans are only limited to Veterans of the United States Armed Services who have a Certificate of Eligibility and who have been honorably discharged from one of the branches of the United States Armed Services. The Department of Veteran Affairs allows up to 100% loan to value on a VA Loan Cash-Out Refinance Mortgage. However, there are VA mortgage lenders who will have VA mortgage lender overlays and will only lend up to 90% LTV on a VA Loan even if the Department of Veteran Affairs will allow up to 100% LTV VA Loan cash-out refinancing.

If you are looking to do a cash-out refinance mortgage on a FHA Loan, Conventional Loan, VA Loan, or Jumbo Loan, please contact me at 262-716-8151 or email me at gcho@gustancho.com. I am available 7 days a week to take your phone calls or email inquiries to answer any questions you may have.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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