Cash-Out Refinance Mortgage Guidelines

Cash-Out Refinance Mortgage Guidelines on Home Loans

ByGustan Cho

Homeowners with equity in their homes and overwhelmed with debt can consider a cash-out refinance mortgage as a potential solution to overcoming high debt. Homeowners can do anything with the proceeds from a cash-out refinance mortgage. The following can be paid with a cash-out refinance mortgage:

  • auto payments
  • student loans
  • second mortgage
  • credit cards

Many homeowners who have purchased their homes in the past few years do not realize that the value of their homes has skyrocketed. In this article, we will discuss and cover cash-out refinance mortgage guidelines for homeowners. With home equity, homeowners are eligible for a cash-out refinance mortgage. You can use the proceeds from a cash-out refinance on anything the borrower seems pleased with.

Proceeds From The  Cash-Out Refinance

Any proceeds from the cash-out refinance are tax-free. Borrowers do not have to pay any taxes from the cash-out refinance proceeds. Using the proceeds from a cash-out refinance mortgage can drastically lower the monthly payments. This holds true if you get a low mortgage rate.  Proceeds can also be used for the following:

  • Home renovations
  • Elderly care
  • Vacations
  • Second-home purchase
  • Investments
  • Other needs

A cash-out refinance mortgage loan for homeowners with equity will probably be the quickest and easiest fix to overcoming high debt. You can pay outstanding debts with a cash-out refinance mortgage. For example, car payments can be very high. Most car loans are amortized over 3 to 5 years. Interest rates on car loans are north of 6 percent.

Reduced Monthly Payments With Cash-Out Refinance

Housing prices have been increasing in the past few years. In some areas, housing values are appreciated by double digits. Cash-Out Refinance Mortgage Guidelines For Homeowners require homeowners to have home equity except for VA loans. Ronda Butts, the director of the business development managers, said the following:

Many areas in Texas, Georgia, DC, Utah, Alabama, Kansas, Missouri, Tennessee, Florida, Illinois, California, Wisconsin, Washington, Indiana, and many other states have more home buyer demands than inventory.

Even if the homeowner gets the same interest rate or slightly higher interest on the refinance mortgage loan, the new payment may be slightly higher. This is because the cash-out refinance mortgage loan will have a higher loan balance than the older mortgage loan balance.

Coming Out Ahead With Refinance Mortgage Loan

Per Cash-Out Refinance Mortgage Guidelines, homeowners can do whatever they like with the proceeds of their refinance. There are ways homeowners can do a refinance mortgage loan and get cash back to overcome high debt and come out ahead. All debts get paid off, and homeowners eliminate most other monthly debts and keep the same mortgage payment.

Or mortgage payment is slightly higher, which will not dent finances. Homeowners can get a lower interest rate on a cash-out refinance mortgage loan to pay off outstanding debt and reduce the substantial monthly debt. For example, case scenario. $200,000 mortgage balance at an interest rate of 5.75% on a 30-year term mortgage.

The current principal and interest payment on your current loan will be $1,167.15. The homeowner needs $30,000 from a cash-out refinance mortgage to pay off $15,000 in credit card debt and $15,000 in auto loan. Do a $230,000 cash-out refinance mortgage with a new 30-year fixed-rate loan at a 4.25% interest rate? The new monthly mortgage payment will be $1,131.46 per month.

Case Scenario On Cash-Out Refinance Mortgage

In the above case scenario, the monthly automobile loan payment was $400, and the minimum credit card payments were $600. By refinancing and paying off an auto loan and credit cards, homeowners will save over $1,000 monthly.

Mortgage payments can be lower than they used to be, even with a $30,000 larger balance.

A cash-out refinance mortgage loan can be a solution for those overwhelmed with high monthly payments. With the excess cash from the refinance mortgage loan, they can pay off all or most of their credit card balances, car loans, and other monthly installment loans.

Cash-Out Refinance Mortgage Guidelines Per Loan Programs

In this blog, we will cover cash-out refinance mortgage guidelines for homeowners. To qualify for cash-out refinance mortgages, homeowners need equity in their homes. The amount of cash-out allowed depends on the particular loan program.

Mortgage Rates on cash-out refinance mortgages are higher than rate and term refinance. VA loans allow up to 100% loan-to-value on cash-out refinance mortgages.

HUD allows up to 80% LTV. Fannie Mae and Freddie Mac allow up to 80% LTV on cash-out refinance mortgages.  Paying off a car note will save you a big paycheck. Paying off your car note will lower your monthly payment. Homeowners can get an 80% LTV cash-out refinance mortgage guidelines on FHA, Conventional, and non-QM loans. 100% LTV on VA loans.

Paying High-Interest Credit Tradelines With Proceeds From Cash-Out Refinance Mortgage

Paying off your car loan with the proceeds of the refinance mortgage loan will lower your monthly payment because a mortgage is amortized over 30 years (today’s mortgage rate ). Besides giving our borrowers a wide variety of mortgage loan options, the team at Preferred Mortgage Rates has the lowest rate in the industry.

The team at Preferred Mortgage Rates are experts on non-QM loans and bank statement loans for self-employed borrowers. Preferred mortgage rates has competitive rates on government, conventional and non-QM loans.

Car loans are amortized over three to six years. Paying off your credit cards with the proceeds of a car loan will save you thousands of dollars. Home loan mortgage rates are substantially lower than the 20-plus percent credit companies charge.

Finding A Lender With No Overlays On Cash-Out Refinance Mortgage Guidelines

For homeowners needing to qualify for a cash-out refinance mortgage with a mortgage lender with no mortgage overlays, please get in touch with us at Preferred Mortgage Rates at 800-900-8569 or text us for faster response. Or email us at gcho@gustancho.com. We have no mortgage lender overlays on FHA, VA, USDA, and Conventional loans.

We are available evenings, weekends, and holidays seven days a week. There is no waiting period after the housing event or bankruptcy to qualify for non-QM loans.

There are no private mortgage insurance requirements for self-employed borrowers on NON-QM and bank statement loans. A 10% to 20% down payment is required on a home purchase. The amount of down payment required depends on borrowers’ credit scores.