Cash-Out Refinance Mortgage Guidelines On Loan Programs

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Cash-Out Refinance Mortgage Guidelines On Loan Programs

This BLOG On Cash-Out Refinance Mortgage Guidelines On Loan Programs Was UPDATED On December 4th, 2018

Cash home buyers are the home buyers of choice for any home seller and home seller’s realtors.

  • Cash buyers normally can get the winning bid on a property with multiple offers
  • Home sellers normally will take a lower offer on a multi-offer to a cash buyer with no contingencies
  • Most buyers do not want to tie up their cash on a home purchase
  • However, many buyers do have the means of pulling the cash together to purchase a home cash
  • Often they may want to do a cash-out refinance right after their purchase

Waiting Period Requirements On Cash-Out Refinance

Many home buyers just assume that if they purchase a home with cash that they can turn around and do a cash-out refinance the next day.

  • They often borrow money from family, relatives, or close friends and will pay them back right after they close by doing a cash-out refinance
  • Unfortunately, after the major 2008 real estate market collapse, cash-out refinance rules and regulations have changed
  • There are strict rules with regards doing a cash-out refinance after a home purchase
  • There are mandatory waiting periods to do a refinance mortgage
  • This is for both Conventional and FHA mortgage loan programs

FHA Loan Refinance Mortgage

FHA loan programs has a 6 month waiting period for a rate and term refinance mortgage. The maximum loan to value on a rate and term FHA Refinance Mortgage is 97.75% LTV.

  • To do a cash-out FHA Loan refinance mortgage, there is a 12 month waiting period
  • The maximum cash-out loan to value on a FHA loan refinance mortgage is capped at 85% LTV
  • The property cannot be listed on the market on any refinance loans

Conventional Loan Refinance

To do a rate and term as well as a  cash-out refinance, there is a six month waiting period after a home purchase.

  • The maximum loan to value on a conventional cash-out refinance is 80% loan to value
  • Two appraisals may be required depending on the conventional lender

Cash-Out Refinance Mortgage

Fannie Mae Delayed Financing Mortgage Program: No Waiting Period For Cash-Out Refinance

Under Fannie Mae’s Delayed Financing mortgage program, there is no waiting period to do a cash-out refinance mortgage.

  • A homeowner can do a cash-out refinance mortgage the next day after they close the home cash
  • There are terms with Delayed Financing
  • Maximum cash-out on refinance mortgage with the Delayed Financing program is 70% and the loan amount
  • It cannot be greater than the actual purchase price
  • For example, here is a case scenario:
    • if you purchased a home for $200,000 cash
    • want to do a cash-out refinance mortgage under the delayed financing program
    • maximum mortgage loan amount is $140,000
  • Here is a case study:
    • purchased the home for $100,000
    • did $100,000 worth of renovations to the home
    • home is appraised at $200,000
    • the maximum borrower can get a cash-out refinance mortgage is $100,000
    • not $140,000 because loan amount cannot be greater than the purchase price
    • on this case is $100,000

Other Cash-Out Refinance Mortgage Loan Programs

USDA does not allow cash-out refinance mortgage loans. VA does allow 100% cash-out refinance mortgage. However, VA Loans are only for veteran borrowers with a valid Certificate Of Eligibility. Gustan Cho Associates Mortgage Group at Loan Cabin Inc. has various loan programs for cash-out refinancing. NON-QM Loans and Bank Statement Loans for self employed borrowers are becoming increasing popular. NON-QM Jumbo Mortgages are available for self employed borrowers with no tax returns required and credit scores down to 620. Contact us at Gustan Cho Associates Mortgage Group at Loan Cabin Inc. at 262-716-8151 or text us for faster response. Or email us at gcho@loancabin.com.

Related> What is delayed financing?

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