This ARTICLE On HUD Updated Cash-Out Refinance Guidelines Was PUBLISHED On September 30th, 2019
The housing market is hot.
- With the exception of a few states, many homeowners who purchased their home a few years ago are enjoying their home values rise
- Many homeowners have homes that have appreciated more than double-digits
- Some have homes that appreciated in value by 30% to 40% or more
- It seems that lower-taxed states are the areas where homeowners are enjoying the hefty gain in their home equity
- Other states like Illinois, New York, New Jersey, California has seen a substantial drop in home prices and an increase in property taxes
- Due to the sudden appreciation of home prices nationwide, HUD Updated Cash-Out Refinance Guidelines by lowering the current 85% LTV to 80% LTV on cash-out refinances
- The main fear HUD has along with other federal mortgage agencies is a potential of a housing correction and/or crash
In this article, we will cover and discuss HUD Updated Cash-Out Refinance Guidelines On FHA Mortgages.
Benefits Of Cash-Out Refinancing For Homeowners
There are many benefits for doing a cash-out refinancing for homeowners.
- Most loan programs offer cash-out refinancing
- The key to getting cash by refinancing is homeowners must have equity
- FHA was the most in loan to value caps of 85% LTV until the recent changes on the HUD Updated Cash-Out Refinance Guidelines where HUD lowered them to 80% LTV
- Proceeds taken out on a cash-out refinance is tax-free
- Proceeds are not taxed by the Internal Revenue Service
- Homeowners can use the proceeds for any purpose they like
- It can be paid to pay down credit card balances, pay off a car loan, investments, home renovations, weddings, or vacations
- It can also be used to pay down and/or off a second mortgage and/or HELOC
Cash-Out Refinances are one of the most popular loan programs at Gustan Cho Associates Mortgage Group. The average balance on a credit card debt is $6,506 and the average credit card interest rate is at 18.98%.
Minimizing Monthly Debts By Using The Equity In Your Home
Monthly payments can add up.
- By paying the minimum monthly credit card payment due will hardly make a dent in reducing your credit card debt
- Average auto payments are $400
- However, if you take $50,000 cash against the equity of your home, the extra mortgage payment on a $50,000 additional mortgage balance is $250 per month
- With the $50,000 cash proceeds, you can pay off most of your debts including your auto loan
- The amount of proceeds you can get depends on the equity you have in your home
HUD Updated Cash-Out Refinance Guidelines allow up to 80% loan to value.
HUD Updated Cash-Out Refinance Guidelines Versus Other Loan Programs
Mortgagee Letter 2019-11 for FHA Case Numbers assigned on and/or after September 1st, 2019 will need to abide by the new guidelines. The bottom line is HUD now requires the maximum loan to value to be no greater than 80% on FHA Cash-Out Refinance Mortgages. The new guideline is a reduction from the old 85% LTV cap. HUD is not the only loan program that has reduced the loan to value on cash-out refinances. The Department of Veterans Affairs has recently announced that the loan to value on cash-out refinances on VA Loans will be reduced from 100% to 90% LTV. As mentioned earlier, federal agencies are getting afraid of a potential housing market correction. Mortgage Agencies do not want to see a repeat of the 2008 Real Estate and Mortgage Crisis. Fannie Mae and Freddie Mac have 80% LTV loan caps on cash-out refinances and so do Jumbo Mortgages. Non-QM Loans can go up to 90% LTV. For more information about this article and/or other mortgage-related topics, please contact us at 262-716-8151 or text us for faster response. Or email us at firstname.lastname@example.org.