Cash Out Refinance Mortgage Loan Eligibility Guidelines

This Article Is About 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 on FHA loans. The Department of Veterans Affairs will allow up to a 100% LTV on cash-out refinance on VA loans. 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 loans 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 loans programs that will suit your needs.

In this blog, we will discuss Cash Out Refinance Mortgage Loan Eligibility Guidelines and the benefits of doing a cash-out refinance.

Why Cash-Out Refinance Mortgage Loan?

There are many reasons why homeowners seek cash-out refinance mortgage loans. Most of them get cash-out refinance mortgage loans 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 loans.

Terms And Rates On Cash-Out Refinance Mortgage Loan

If you are shopping for cash-out refinance mortgage loans, there are conditions that you need to consider. Most mortgage bankers or banks do not do cashout refinance mortgage loans. If you are interested in cashout refinance mortgage loans, you should consult with a loan officer.

Mortgage companies have dozens of correspondent lenders. They should have investors who cater to cashout refinance mortgage loans. One of the things that you should realize is that mortgage rates will be higher for cashout refinance mortgages. Lenders will hit you with an adjustment just for being a cashout refinance mortgage loan. Most lenders prefer a 75% loan to value on cashout refinance loans. However, there are mortgage lenders who will go up to 80% loan to value on cashout refinance. There are a few lenders that will even go up to an 85% loan to value on cashout refinance mortgage loans. You must remember that the higher your loan to value is, the higher your mortgage rate will be.

On cashout refinance mortgages higher than 80% loan to value, private mortgage insurance premiums apply.

FHA And VA Cash-Out Refinance During Chapter 13 Bankruptcy Repayment Plan

As mentioned earlier, the housing market is booming. Home values have been increasing double digits in the past several years. HUD and the Federal Housing Finance Agency have been increasing maximum FHA and Conforming loan limit year after year due to skyrocketing home values. Many homebuyers are being priced out of the market due to skyrocketing home prices.

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 with an FHA and/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 and/or VA cash-out refinance.  It does need to be a manual underwrite.

Loan To Value On FHA And VA Cash-Out Refinance During Chapter 13 Bankruptcy Repayment Plan

The maximum loan to value on an FHA cash-out refinance loan is 80% LTV and borrowers can do up to a 100% LTV cash-out refinance on a VA loan. If you are getting an FHA and/or VA refinance and/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 mortgage during the Chapter 13 Bankruptcy repayment plan. There is no waiting period after the Chapter 13 Bankruptcy discharged date to obtain an FHA and/or VA purchase, refinance, or cash-out refinance mortgage. 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 Loan For Investment PropertiesCash Out Refinance Mortgage Loan For Investment Properties

If you own second or vacation homes, you can still do a cash-out refinance mortgage. 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 Requirements

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 85% LTV on FHA Loans
  • USDA does not allow cash-out refinance mortgages
  • 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 262-716-8151 or text us for a faster response. Or email us at [email protected] The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.

Related> Cashout Refinance Mortgage

Related> FHA Cashout Refinance Guidelines

Related> Cashout Refinance Home Loans

Leave a comment