Cash-Out Refinance Mortgage Guidelines On Loan Programs

This Article Is About Cash-Out Refinance Mortgage Guidelines On Loan Programs

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 to 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 have 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 an 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

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 a mortgage under the delayed financing program
• the maximum mortgage loan amount is $140,000

Case Scenario

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 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 has various loan programs for cash-out refinancing. NON-QM Loans and Bank Statement Loans for self-employed borrowers are becoming increasingly 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 800-900-8569 or text us for faster response. Or email us at gcho@gustancho.com.

Related> What is delayed financing?