What is a Cash-Out Refinance?
Life is full of unexpected expenses. Homeowners who have built up equity in their homes may qualify for a refinancing program that allows them to borrow some of the difference between the amount they owe on their home and the current value of the property. This is known as a cash-out refinance.
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A cash-out refinance could be a good option if you:
- Have equity in your home.
- Need funds to help pay for a major expense, such as college tuition or large-scale home improvement project.
- Need to consolidate debt or pay off other high-interest loans.
- Will have a reduced income for a period of time (for example, one income earner is going back to school or staying home with young children for a few years).
How do I qualify for a cash-out refinance?
In order to qualify for a cash-out refinance, you must have enough equity in your home to be eligible to borrow the amount of your current mortgage plus the amount you would like to use as cash. Some loan programs limit the amount you can borrow to 80% of the home’s value, while others will allow up to 90% or more. The current value of the property will be determined by an appraisal conducted by a licensed, third party appraiser.
In addition, homeowners will need to show that they will be able to repay this new mortgage as agreed. Credit history and score, income, other debts, current assets, and more will be examined to determine whether the loan application will be approved.
Available Refinance Mortgage Program Options
eLEND offers the following refinance mortgage programs which may be used to take cash out:
- Conventional Fixed Rate Mortgages – A fixed interest rate means your payment will stay the same for the life of the loan.
- FHA Loans – Offers low down payment options and lenient credit requirements.
- VA Mortgages – No money down financing options for eligible military veterans, active duty servicemen and women, and surviving spouses.