Cash-Out Refinancing Mortgage Guidelines On Home Loans
This article covers Cash-Out Refinancing Mortgage Guidelines On Home Loans
As thousands of Americans are keeping an eye on the mortgage market, there has been an uptick in cash-out refinancing.
- Gustan Cho Associates are a full-service mortgage lender without any LENDER OVERLAYS
- As interest rates drop, many Americans are seizing this opportunity to get their financial picture back in focus
- In this blog, we will detail what cash-out refinancing means and how to start your cash-out refinance
- The rules for cash-out refinancing our ever-changing and a big rule change was just announced for FHA mortgages
- More details to follow
Cash-Out Refinancing Mortgage Process
What does a cash-out refinancing mean?
- A refinance transaction where you take equity out of your property in the form of cash
- This cash can be taken out in a few different forms
- Some families have a free and clear house, and some families pay off their current mortgage and take additional cash out
- Either way, the refinance transaction results in a higher loan amount than previously on the property
This allows you to use the equity in your walls without selling the property.
Why Do Americans Take Cash Out Of Their Properties?
There are many reasons to take cash out of your property. It is a way to borrow money at a low rate with relatively low risk.
- You are able to amortize cash-out refinance for up to 30 years, giving Americans cheap access to extra money
- Especially if you are going to stay in the property for a while, these funds can help your family
- Debt consolidation, home renovations, and investing are the most common reasons Americans take cash out of their properties
- Utilizing the cash out to pay off high-interest consumer debt can help hit the reset button on your finances
Turning the high-interest credit card debt, it to tax-deductible mortgage interest has many benefits.
In this example, a client will consolidate their current mortgage, auto loan, and credit cards into one new loan. They are also getting $11,000 in cash proceeds AFTER paying these debts. All said and done, they save $219 a month. Savings like these are not uncommon for cash-out refinances.
What Are The Cash-Out Refinancing Qualifications?
The qualifications will be different for each mortgage product. Conventional, FHA, and VA mortgages all have different requirements.
Minimum credit score:
- FHA -500
- Conventional – 620
- VA – No minimum credit score
- FHA – as of September 1st, 2019 – 80% Max LTV
- Conventional – 80% Max LTV
- VA – 100% MAX LTV (including VA funding fee)
What Items Are Needed To Start The Mortgage Process?
- Driver’s License
- Last 30 Days of Pay Stubs
- Last Two Years Tax Returns – (not always needed)
- Last Two Years W2 or 1099s
- Current Mortgage Statement
- Homeowners Insurance Policy
Closing Costs Are Involved?
With any mortgage transaction, there will be closing costs involved.
- The good news with refinance transactions as these costs are not out of pocket
- With a purchase transaction, the closing cause may not be wrapped into the loan. that is not true for refinancing
- The only out-of-pocket expense prior to closing is the cost of an appraisal
- The appraisal fee will vary depending on your state and loan product
- All of the LOAN FEES will be disclosed to you on a Loan Estimate
- Fees included in Cash-out refinance transactions include lender origination, title work, local fees and taxes, and in some cases ESCROWS
- Title fees are much lower for refinancing your home versus purchasing be home
Please call Mike Gracz on 630-659-7644 for more information on costs associated with a refinance.
Texas Cash-Out Refinancing Mortgage Guidelines On Home Loans
Texas Cash-Out Refinance Rules:
- Texas is one of the largest states in the country, and they have a few different refinance rules
- You may not utilize an FHA or VA cash-out refinance in the state of Texas
- This is due to the Texas A (6) cash out rule
- Please click our blog on TEXAS CASH-OUT A (6) REFINANCE RULES for more information
- It is unclear with the new FHA MAX LTV guideline change if Texas will amend their A (6) mortgage guidelines
- In short, this A (6) rule does not allow the citizens of Texas to utilize any loan product which allows refinancing above 80% loan to value
- As the current guidelines state, FHA allows cash-out refinances up to a loan to value of 85% (changing to 80% LTV on September 1st, 2019)
- VA cash-out refinances are able to go to 100% loan to value
If you are a Texas citizen, visit our website after September 1st for an update on FHA Cash-Out.
Lowest Mortgage Rates In The Past 3-Years
Mortgage interest rates recently hit a three-year low. This is a great time for American families to utilize the equity in their homes to help better their current situation. Thousands of Americans are able to take cash out of their property and lower their interest rate at the same time. If you utilize the cash proceeds to pay off existing consumer debt, you may save hundreds of dollars a month. No two client’s Financial situations are identical. Please reach out to Gustan Cho Associates for a fully customized Cash-out refinance consultation. Reach out to the team at GCA Mortgage Group at 262-716-8151 or text us for a faster response. Or email us at [email protected] After your initial conversation, you will be paired with highly skilled Loan Officers from The Team at Gustan Cho Associates! Let’s see how much money we can save you!