A cash-out refinance replaces your existing home loan with a newer loan. The difference between the two loans is the amount of cash you withdraw from the total equity in your home. This same equity directly affects how much cash you’ll be able to access with a cash-out refinance. Once the cash is withdrawn there is no restriction on how it can be used.
Cash-out refinances closing costs range between 2-6% of the total loan amount and are deducted from your “cash-out” at closing. Cash-out closing costs are typically higher than other refinance options because rates are higher, and many borrowers opt to buy down their rate with mortgage points. These optional mortgage points increase your closing costs. Your specific cash-out refinance closing costs are based on the size of your loan, length of term, and credit score.
Cash-out refinancing is available to homeowners with both conventional and government-backed mortgages. Along with the equity requirements, individual providers or loan types may have specific criteria- such as minimum credit scores or requirements to have owned the home for a minimum amount of time. There are some exceptions to the minimum time of ownership; the death of a homeowner, inheritance or legal divorce, fall under this criteria.
Most providers require you to retain 20% equity in your house after the cash-out is complete. This is called having a loan-to-value (LTV) ratio of 80%. Maintaining 20% ownership of the property ensures you can avoid paying private mortgage insurance (PMI). It can also help to prevent you from owing more than your home is worth if market conditions change. For any questions regarding our refinancing program contact us through our website or give us a call. Our award-winning team is ready to help you with your current or future refinancing plans today
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Disclaimer: This calculator is provided for informational purposes only. It is not an indication of loans available through Quintessential mortgage Group, LLC.