(305) 900-2012

Cash-Out Refinance

Owning your own home is an important investment — one that helps build equity. Luckily, you don’t have to wait until your mortgage is paid off to access your home’s equity. You can turn the equity you’ve built into cash with a cash-out refinance loan.

A cash-out refinance loan is a new mortgage that replaces your current mortgage and gives you cash at closing. This cash can be used for any purpose you choose, such as home repairs, paying off high-interest debt, or investing in other property.

What is a Cash-Out Refinance Loan?

A cash-out refinance loan is a type of mortgage that allows homeowners to cash in on the equity they’ve built in their homes. Essentially, you’re taking out a new mortgage with a higher amount to replace your current one and receiving cash for the difference at closing. 

This cash can be used for any purpose you choose, such as home repairs or improvements, paying off high-interest debt, or investing in other property. A cash-out refinance loan is a great way to borrow cash from your home without taking out a second mortgage or HELOC (home equity line of credit).

There are a handful of options when choosing to finance, whether you’re looking to cover expenses, pay down high-interest debt, pay student loans, or other needs. However, personal loans may not offer the most affordable terms. Cash-out refinance loans have better terms because they’re secured by the value of your home. 

Whether the original loan you bought your house with is conventional, FHA, or VA, you may qualify for a cash-out refinance.

The qualification process is similar to qualifying for a conventional purchase loan. You need to meet standards set by government-sponsored Fannie Mae (the Federal National Mortgage Association) and Freddie Mac (the Federal Home Loan Mortgage Corporation). With these standards come flexible refinancing options.

How to Get a Cash-Out Refinance Loan

To learn whether a cash-out refinance loan is the best option for reaching your financial goals, connect with us. To get you started, we’ve outlined the steps and documentation needed to help you understand what it takes to get approved for a cash-out refinance loan.

The Refinancing Process

Connect with us, and we’ll help you assess whether you’ll benefit from refinancing your current mortgage. For a cash-out refinance, we’ll consider your current interest rate, credit score, a home appraisal, and the amount of equity you have in the home. 

We’re with you through each step leading to closing, where you can begin to make the most of your home’s equity with the cash you receive.

Cash-Out Refinance Loan Requirements to Meet

These are the common requirements often needed to qualify for a cash-out refinance loan. If you have questions about these requirements, we’re here to help.

  • In most cases, it’s best to have a credit score of 620 or higher. With higher credit scores often comes better interest rates.

  • Through underwriting evaluation, you’ll need documentation of consistent income with a Debt-to-Income ratio at or below 50%. This ratio shows how much of your monthly income goes to paying your debt.

  • Along with income information you need to share employment verification and history.

  • It helps to have a Loan-to-Value ratio of 80% or less, meaning you’ve paid 20% equity into the home. This is not always required, but it can eliminate Private Mortgage Insurance (PMI) and allow you to borrow the most cash.