fbpx
Cash-Out Refinance
With the rapid appreciation that homes have had in the last two years, most homeowners have equity. A common way to release part of the equity is to cash-out refinance but some homeowners may not be eligible currently. This type of loan replaces the current mortgage by paying it off and an additional amount of […]
Cash-Out Refinance
With the rapid appreciation that homes have had in the last two years, most homeowners have equity. A common way to release part of the equity is to cash-out refinance but some homeowners may not be eligible currently. This type of loan replaces the current mortgage by paying it off and an additional amount of […]

kRH4tHwWEEusiYM82vBVDQ.jpg

With the rapid appreciation that homes have had in the last two years, most homeowners have equity. A common way to release part of the equity is to cash-out refinance but some homeowners may not be eligible currently.

This type of loan replaces the current mortgage by paying it off and an additional amount of cash for the owner. Generally, lenders will consider a new mortgage up to a total of 80% of the current value.

Typically, the rate on a cash-out refinance will be slightly higher than a traditional purchase money mortgage. As is in any lending situation, the rate depends on the borrower’s credit and income. The best interest rates are available to borrowers with higher credit scores, usually over 740.

Loan-to-value can affect the rate a borrower pays also. A 70% loan-to-value mortgage could be expected to have a lower interest rate than an 80% LTV because there is a larger amount of equity remaining in the property and therefore, less risk for the lender.

There are no restrictions on how the owner can use the money. It can be used for home improvements, consolidating debt, other consumer needs or for investment.

Eligibility Requirements as found in FNMA Selling Guide B2-1.3-03 Cash-Out Refinance Transactions

“Cash-out refinance transactions must meet the following requirements:

  • The transaction must be used to pay off existing mortgages by obtaining a new first mortgage secured by the same property or be a new mortgage on a property that does not have a mortgage lien against it.
  • Properties that were listed for sale must have been taken off the market on or before the disbursement date of the new mortgage loan.
  • The property must have been purchased (or acquired) by the borrower at least six months prior to the disbursement date of the new mortgage loan except for the following:
    • There is no waiting period if the lender documents that the borrower acquired the property through an inheritance or was legally awarded the property (divorce, separation, or dissolution of a domestic partnership).
    • The delayed financing requirements are met. See Delayed Financing Exception below.
    • If the property was owned prior to closing by a limited liability corporation (LLC) that is majority-owned or controlled by the borrower(s), the time it was held by the LLC may be counted towards meeting the borrower’s six-month ownership requirement. (In order to close the refinance transaction, ownership must be transferred out of the LLC and into the name of the individual borrower(s). See B 2-2-01, General Borrower Eligibility Requirements (07/28/2015) for additional details.)
    • If the property was owned prior to closing by an inter-vivos revocable trust, the time held by the trust may be counted towards meeting the borrower’s six-month ownership requirement if the borrower is the primary beneficiary of the trust.
  • For DU loan case files, if the DTI ratio exceeds 45%, six months reserves is required.”

LIST OF BLOGS

Understanding Credit Life Insurance for Home Buyers

Credit life insurance is a specialized type of insurance designed to provide financial protection for borrowers and their families in the event of the borrower's untimely death. This insurance is often associated with loans, including mortgages, and is specifically...

Discover how to make a difference in your neighborhood

Whether you're a seasoned homeowner or just starting this thrilling chapter, every time you turn your key, you're not just entering a house but also embedding yourself in a neighborhood. The heartbeat of a vibrant community doesn't solely rest upon pristine lawns or...

How Home Value Growth Beats Renting

Over the last 60 years, the average sales price of homes has appreciated at a rate of 5.56% annually, according to the Federal Reserve Economic Data. During the same period, rent has increased at a rate of 3.88% annually which presents a compelling argument in favor...

Access “Trapped Equity” without Refinancing

American homeowners have a record amount of equity in their home. Many of these homeowners would like to cash out part of that equity but don't want to trade an historically low interest rate for one that is as high as it's been in 20 years. Instead of refinancing...

Navigating Closing Costs During Your Home Sale

Buying or selling a house is an exciting and sometimes confusing experience that includes expenses called "closing costs" that can often catch us by surprise. Closing costs are simply the fees and expenses incurred by buyers and sellers during a real estate...

Tap into your home equity five ways

Your home is not just a place to live; it's a valuable asset that can serve as a financial resource when you need it most. One of the significant advantages of homeownership is the opportunity to build equity over time, which can be accessed in various ways to fund...

New Construction Homes with Your Own Agent

Homebuyers in the market who are frustrated by the low inventory are finding what they want in new construction. Among the obvious advantages are that it is fresh and new, has never been lived in, and can be personalized to an individual's taste and needs. New...

How Rapid Rescoring Can Make a Difference

Imagine you're on the verge of securing a mortgage, and a slightly higher credit score could mean a lower interest rate. The good news? There's a quicker way to make that possibility a reality. Mortgage loans are often more time-sensitive than other loans. If you find...

Why It’s a Smart Move to Buy a Home in the Current Market

If you're in a financially stable position, now might be the perfect time to embark on your homeownership journey. Buying a home today offers several advantages, including the opportunity to build equity and stabilize your housing costs in the face of rising expenses....

RECENT POSTS

ABOUT  TWENTY
THREE HOMES

The Twenty Three Homes are one of the premiere real estate groups locally, nationally and internationally, specifically dealing with high-end properties and exclusive clientele. Partner with Keller Williams Twenty Three Homes are full service real estate experts whose clients benefit from the custom tailored, hands on service while receiving all the exclusive amenities and resources of one of the most established and respected firms in the business.

GET IN TOUCH