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Cash Out Refinance

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What is a Cash-Out Refinance?

A Cash-Out Refinance is a way to get equity out of your property so you can pay off debt, renovate your home, or make other purchases that do not involve incurring new debt. It replaces the current mortgage on a home with one for more than is currently owed, giving the owner the difference in cash.

Why a Cash-Out Refinance?

A Cash-Out Refinance is a great way to leverage your home equity. Using the cash to pay down or pay off consumer debt or student loans can improve your debt-to-income ratio, and credit score. The money can also be used to invest in home improvements, increasing the value of your property. In addition, it can be used to make other investments or to pay for things like college tuition.

A Cash-Out Refinance can also have the benefits of a regular mortgage refinance, such as a lower interest rate, or the opportunity to switch from an adjustable to a fixed-rate mortgage.

What Are the Requirements for a Cash-Out Refinance?

To be eligible for a Cash-Out Refinance, owners must make on-time payments on the property for at least 12 months, and must have at least 20 percent equity in the property. The maximum loan-to-value ratio for a primary residence is 80 percent, meaning that up to 80 percent of the home’s equity can be taken in cash. For second homes or investment properties, the maximum loan-to-value rate is 75 percent, meaning borrowers must have 25 percent equity in the property. The minimum credit score required for a Cash-Out Refinance of a conventional mortgage is 620. For FHA back loans, the minimum credit score is 580. 

If you would like to explore fixed rate mortgages or other mortgage products available from Brightpath, please call us at 888-222-6003, or complete our simple form below. One of our experienced mortgage specialists will contact you.

 

 

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