Debt Consolidation Cash-Out Refinance Mortgage Guidelines

Debt Consolidation Cash-Out Refinance Mortgage Guidelines

Gustan Cho Associates are mortgage brokers licensed in 48 states

This Article Is About Debt Consolidation Cash-Out Refinance Mortgage Guidelines 

Home values have appreciated tremendously in the past few years.

In this blog, we will discuss debt consolidation cash-out refinance mortgage guidelines on the various loan programs.

Debt Consolidation Cash-Out Refinance To Lower Monthly PaymentsDebt Consolidation Cash-Out Refinance

Many high-income wage earners still live paycheck to paycheck.

  • Interest rates on credit card debt can exceed over 20%
  • No matter how much monthly payment you make on your credit card payments, it is next to impossible to pay down the balance due to the high-interest rates
  • Average monthly auto loan payments can easily exceed $400 plus per month
  • Most professionals have high student loan debt
  • You add these minimum monthly payments, it can become a significant amount where it can add and/or build stress
  • Debt Consolidation Cash-Out Refinance may be a solution for homeowners to substantially lower their monthly household payments
  • Debt Consolidation Cash-Out Refinance is a great option for homeowners who have equity in their homes

Credit card interest rates are substantially higher than mortgage interest rates. Plus, homeowners can deduct mortgage interest from their income tax returns. Consumers cannot deduct credit card interest from their income tax returns.

Debt Consolidation Cash-Out Refinance Benefits For Homeowners

Homeowners with equity in their homes can greatly benefit from Debt Consolidation Cash-Out Refinance.

  • Terms on a mortgage are substantially longer than other high ticket credit tradelines
  • For example, a $30,000 car loan has an average $400.00 monthly payment
  • The reason it is so much is that most car payments are amortized over 36 to 60 months
  • However, most mortgage payments are amortized over 30 years
  • A $30,000 monthly mortgage loan balance has an average monthly mortgage payment of $150
  • If a homeowner would cash-out $30,000 on their refinance, it would add $150 per month but would eliminate the $400 auto payment if the homeowner would pay off the car note with the proceeds of the refinance
  • This would mean a $350 monthly savings
  • Mortgage interest rates are substantially lower than auto, student loans, credit cards, installment loans, and other creditors

Every loan program has different maximum loan to value Debt Consolidation Cash-Out Refinance Guidelines.

Fannie Mae And Freddie Mac Debt Consolidation Cash-Out Refinance Guidelines

Fannie Mae and Freddie Mac set conventional mortgage guidelines. Here is the loan to value caps on conventional loans:

  • The maximum loan to value on cash-out refinance mortgages on conventional loans on primary residences is 80% LTV
  • There is no private mortgage insurance required on LTV of 80% and lower
  • Investment properties have a maximum of 75% LTV on cash-out refinance mortgages
  • There is a minimum of a 6 months waiting period to do a cash-out refinance mortgage from the original closing date on conventional loans

HUD Debt Consolidation Cash-Out Refinance Guidelines

HUD is the parent agency of FHA.

  • Borrowers can do cash-out refinance mortgages with FHA Loans
  • The maximum loan to value on cash-out refinance on FHA Mortgages is capped at 85% LTV
  • There is a minimum of 12 months waiting period to do a cash-out refinance mortgage from the original closing date on FHA Loans

VA Debt Consolidation Cash-Out Refinance Requirements

VA Loans is limited to active, retired, spouse of deceased veterans of the U.S. Armed Services:

  • The VA allows 100% LTV on cash-out refinance mortgages

Michael Gracz, the National Sales Manager of Gustan Cho Associates, issues the following statement on VA Cash-out refinance mortgages:

Other Benefits On Debt Consolidation Cash-Out Refinance

VA mortgage interest rates are among the lowest of any other loan program due to The VA guarantee. Here are additional benefits in doing a Debt Consolidation Cash-Out Refinance on VA Loans:

  • Homeowners can skip up to two monthly mortgage payments
  • Paying off all consumer monthly debts and having an overall lower monthly payments
  • If refinancing an FHA Loan into a VA Loans, the HUD refund is possible and no the annual FHA mortgage insurance will be eliminated
  • Consolidate all of your monthly payments with the new mortgage payment
  • Potentially get a refund of current escrow balance for extra cash in your pocket

For more information on this topic or other mortgage-related subjects, please contact us at Gustan Cho Associates at 800-900-8569 or text us for faster response. Or email us at We are available 7 days a week, evenings, weekends, and holidays.

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