Get The Most Cash Out From A Cash-out Refinance

What is the most cash you can get out of your home in today's mortgage market?

Refinancing your mortgage to pay off your existing mortgage and also get cash from the equity in your home is called a cash-out refinance mortgage. Proceeds from these loans that are available to the borrower after paying off existing mortgages can be used for any purpose. These mortgages are different from rate and term refinance mortgages), where borrowers do not receive any cash back at closing. Mortgage lenders consider cash-out refinance mortgages riskier loans so they are harder to get approved for.

Maximum loan-to-value Ratio, or LTV

All mortgage lenders in the last year have cut back on the maximum percentage of your home that you can borrow against. This ratio is called the maximum loan-to-value ratio, or LTV. In addition, Fannie Mae, Freddie Mac and all jumbo mortgage lenders have greatly increased the minimum credit score to obtain a cash-out refinance mortgage loan.

Fannie Mae and Freddie Mac have cut their maximum loan-to-values for cash-out refinance loans up to conforming limits of $417,000 to 80% LTV. At the same time, all mortgage insurance companies have eliminated mortgage insurance availability on any cash-out refinances over 80% LTV so even if lenders wanted to they cannot. In order to qualify for a cash-out refinance with LTVs between 60% and 80%, borrowers need to have a 680 credit score.

Jumbo Cash-out Refinance Loan

For the Fannie Mae and Freddie Mac high-balance/jumbo cash out refinances, with loan amounts that can go as high as $725,250 in high-cost locations, borrowers can refinance up to 75% of the value of their homes and take cash out. Depending on your location, the maximum loan amount varies between $417,000 and $725,250 while the minimum credit score required varies from 660 to 740.

For, jumbo cash out refinance loan programs higher than Fannie Mae and Freddie Mac expanded jumbo limits, most borrowers will be limited to between 50% and 65% LTV on various loan amounts up to $2 million. Those already low LTVs get reduced further for condominiums, second homes and for many loans which are interest-only instead of fully amortizing.

FHA Cash-out Refinance

The FHA program, on the other hand, now allows borrowers to obtain a cash-out refinance up to 85% loan-to-value with FHA mortgage insurance. In addition, the FHA program only requires a 620 credit score, so it is easier to qualify for than a conventional loan from Fannie Mae or Freddie Mac. Mortgage insurance from FHA is required, but it is available and is extremely reasonably priced.

One complicating factor for cash-out refinances is that if your home is located in a county labeled as a "declining market" then your maximum LTV could be cut by 5%.

How Total Mortgage can help you in cash-out refinancing?

In today's real estate market, getting a realistic estimate of the value of your home can be a challenge. When refinancing to take cash out, borrowers need to first get a rough estimate of the real value of their home. Your Total Mortgage loan officer can help you estimate your current market value before spending the money for a full appraisal and then estimate how much cash out you will be able to withdraw from the equity in your home.

Choosing a debt consolidation refinance mortgage loan should be done in conjunction with a review of your overall financial plan.

For a free refinance and cash-out refinance analysis, click here.

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If you have any questions that you would like to get answered by our expert mortgage brokers, please email us or call us at 1-877-868-2503.

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