This BLOG On Cash-Out Mortgage Guidelines On Home Loan Programs Was PUBLISHED On September 6th, 2019
The real estate market is hot everywhere in the United States.
- It does not matter where you live, but home prices have been appreciating year after year since 2012
- The Federal Housing Finance Agency (FHFA) has increased conforming loan limits for three years in a row due to skyrocketing home prices
- The FHFA has increased conventional loan limits to $484,350 for 2019
- HUD, the parent of FHA, has followed FHFA and also increased FHA Loan Limits to $314,827
- This is FHA’s third consecutive loan limit increase
- With skyrocketing home values, many homeowners can explore a cash-out mortgage refinance
- Cash-Out Mortgage Guidelines differs depending on the particular loan program
In this blog, we will cover cash-out mortgage guidelines on government and conventional loans. We will also cover cash-out mortgage guidelines on non-qm loans.
Cash-Out Mortgage Guidelines On Loan Programs
To be eligible to do a cash-out mortgage, homeowners need to have equity in their homes.
- Cash-Out Mortgage Guidelines allows a certain amount of loan to value
- Homeowners can use their cash-out proceeds from their refinance for whatever purpose they like. Proceeds are tax-free
Homeowners do not have to pay any taxes on the proceeds they get from their refinance mortgages.
Alex Carlucci is a senior vice president at Gustan Cho Associates and one of the top refinance loan officers at Gustan Cho Associates Mortgage Group. Here is how Alex Carlucci explains Cash-Out Mortgage Guidelines:
A cash-out refinance is one in which a homeowner replaces their mortgage with a bigger one. The difference between what is owed and what is borrowed goes back to the homeowner in cash. As an example, a homeowner owes $175,000 on a home, and refinance their mortgage for a new loan amount of $200,000. This would be a cash-out refinance, netting the homeowner $25,000 of their home’s equity, less closing costs. Generally, homeowners will do a cash-out refinance to tap into home equity without having to sell their home. They accomplish the same purpose as home equity loans, but cash-out refinances are different. A home equity loan is separate financing on top of your first mortgage. That’s why these loans are often called second mortgages. A cash-out “refi”, though, replaces your first mortgage entirely.
Benefits Of Cash-Out Mortgage Refinancing
Homeowners can use proceeds from their refinance on whatever purpose they deem fit. Here are common uses most homeowners use proceeds from the refinance:
- To consolidate debts
- For improving their homes and/or renovations
- Long overdue vacation and/or travel
- Educational expenses for their children or themselves
- Child and/or Senior Care
- Investments such as investments in securities or to purchase other real estates
- Big-ticket purchases such as buying a new car, boat, RV
- Cash needed for a wedding, funeral, graduation, or other special events
Cash-Out Mortgage Guidelines On Loan To Value
The number of cash homeowners can take out is dependent on the loan to value of the home.
- Maximum loan to value on FHA Loans is 85% LTV
- In order to do a cash-out refinance on FHA Loans, homeowners need to have owned the home for at least 12 months
- Maximum FHA Loan Limits is capped at $314,827 in most areas
- High-cost areas have higher FHA Loan Limits
- VA allows 100% LTV on cash-out refinance on single-family homes
- Maximum VA Loan Limit is $484,350. In high-cost areas, high balance VA Loan Limit is usually capped at $726,525
- USDA does not allow cash-out refinance
- Fannie Mae and Freddie Mac allow up to 80% LTV cash-out refinance on single-family homes
- Jumbo Loans will allow up to 70% to 80% on cash-out refinances dependent on the dollar size
- NON-QM Loans allow up to 80% LTV
For more information and qualifying for a cash-out refinance mortgage, please contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. Or email us at firstname.lastname@example.org. We are available 7 days a week, evenings, weekends, and holidays. We are direct lenders with no overlays on government and conventional loans. We are also non-QM mortgage experts.