Is a cash-out refinance right for you?

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Cash-out mortgage refinancing options

It’s a great strategy to leverage the equity of your home and pay off high-interest loans, fix your house or paying off student loan debt, on the other hand, it may bite you in the end if you use it for something that you don’t need.

Let’s see the options you have and take control of your financial goals and avoid the pitfalls.

Low Rates are here

With the current news on the wire and uncertainties with trade policies. With the Fed cutting rates off .25% basis points, therefore, mortgage rates have been fallen­­ in the last 2 months. Currently is ticking slowly higher but still the lowest in three years.

The refinancing process is usually faster than a purchase, but the usual paperwork is needed. Here is our guide so you can prepare.

Refinancing options you have:

  • Conventional Cash-out Refinance

If you have equity in your home, you can take out as much as 30% of the equity and use it towards completing projects for your home or even just boost your savings.

Usually, the interest is a little higher but still lower than the credit card interest that you’re currently paying.

The big plus side is an improvement to your credit score.

  • FHA cash-out refinance

You can refinance with your FHA loan. This is a great option too if you have a lot of equity in your home or even have a low credit score.  You can get up to 85% of the appraised value of your home

-Pay upfront fee and you have a monthly mortgage insurance premium.

VA loan cash-out refinance

If you are an active or former Military member, you can take advantage of this program.

Pros

-Works with low credit

-You can take-out as much as 100% on the appraised value of the home (don’t do it, take only what you need).

Cons

-You may be required to have higher premium coverage due to the increase in the loan amount.

  • Jumbo Cash-out refinance- $600k+ 30-40% equity range

This is for loans that have around the $600K-$700K loan amounts. It will be underwritten by the banks and not by Fannie Mac or Freddie Mac guidelines. But usually, you can take up to 30-40% range of the appraised value of your home.

As long as you have good credit and have enough cash reserves, the banks will be approving your loan.

Call your local lender

We recommend you start with your local lender. Local lenders have some programs that are different from banks and might fit your needs much better.

Always remember that you can shop for rates, you’re leaving money on the table if you don’t shop for it and it lessens your leverage in taking control of your finances.

A Cash-out refinance is really a flexible option for you to take advantage of. So plan carefully and control the urge not to spend it on things you don’t need.

Property Records Team

Property Records Team

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