Cash Out Refinance

Find Out How Much Cash You Can Receive With a Cash Out Refinance


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Cash-Out Refinance

What Is Cash Out Refinancing?

A traditional mortgage refinance is a loan product that allows you to replace your existing home mortgage with a new one because the new mortgage offers a better rate and terms. A cash out refinance is a special type of mortgage refinance that allows you to replace your first home mortgage while also giving you cash at closing to pay for things like home repairs or renovations, credit card debt, student or car loans, home additions, and more. This cash comes from the equity you have in your home.

Interest rates may be slightly higher on cash out refinance than traditional refinances. When you do a cash out refinance, you will work with mortgage lenders to satisfy your first loan and begin making payments on your new cash out refinance mortgage loan.

Benefits of Cash Out Refinancing

A cash out refinance can provide several benefits to your home loan arrangement by allowing you to do the following:

  • Receive cash out related to the equity in your home
  • Renegotiate the term of your loan
  • Switch from a variable to a fixed rate loan
  • Drop private mortgage insurance (PMI)

See how much you could save and receive in cash with a cash out refinance.


When Can I Do a Cash Out Refinance On My Home?

Each lender and bank have varying conditions that need to be met before you can do a cash out refinance on your home. That said, one standard requirement is that you need to have your original home loan for a minimum of 12 months before you can refinance. Another common requirement lenders have is that you have 20 percent equity in your home before they consider you for a refinance.

Before you sign any cash out loan papers, we suggest that you explore all of your refinance options with a Mortgage Advisor to ensure that you are getting the best loan for you.

Explore your cash out refinance options by talking with a Mortgage Advisor.



Refinancing Your Home is Simple With MortgageAdvisor.com

There are several different cash out refinancing options when it comes to mortgages. Other mortgage sites simply focus on giving you cash out refinancing rates instead of giving you all the information you need to find the right cash out refinancing rate, option, and lender for you. At MortgageAdvisor.com, we operate differently.

Our qualified Lenders help you explore all of your cash out refinance mortgage options and as they learn more about your current situation and goals, they will advise and guide you to find the best cash out refinance option and lender that will work for your budget and lifestyle.

Talk with a Mortgage Advisor to see if a cash out refinance is right for you.

Traditional Refinancing vs Cash Out Refinancing

There are two ways to refinance your mortgage. They include:

  • Traditional Refinance: Refinance your current loan into a new loan with the potential of a better interest rate and loan terms. The reasons you would want to do a traditional refinance mortgage, include:
    • Decreasing your monthly payment
    • Decreasing your interest rate
    • Renegotiating the term of your loan
    • Switching from a variable to a fixed rate
  • Cash Out Refinance: Redefine your loan terms and interest rate and get extra cash that is essentially a trade-in on the equity in your home. There are several reasons why you would want to do a cash out refinance mortgage. These include:
    • Buying a new car
    • Paying off high-interest debt, such as credit cards
    • Making payments on college expenses, student loans
    • Funding repairs, home improvement projects
    • Adding new features to your home to add value (landscaping, pool, etc.)
    • Starting a fund for emergencies

 Discover current cash out refinance mortgage rates.


The Cost of a Cash Out Refinance

Understanding the potential costs of a cash out refinance is two-fold. First, there is the actual cost or monetary difference between your current loan and the cash out refinance loan. Determining whether you will actually save money in the long-run through a newly refinanced loan’s interest rate or terms is key. Second, there are the costs associated to closing costs and other fees that are associated with any new loan. These other fees can include fees for loan origination, application, appraisal, and more. 

Talk with a Mortgage Advisor to learn the potential costs and benefits associated with a cash out refinance.

FHA Streamline Refinance vs FHA Cash Out Refinance

The primary reasons you would do a refinance of your FHA loan is to get a more favorable loan term, interest rate, or drop your mortgage insurance (also known as your Mortgage Insurance Premium (MIP)). FHA-approved lenders charge MIP on their loans to offset their lending risk. In most cases, you can become eligible to drop MIP once you have reached 80% loan-to-value (LTV) ratio on your mortgage.

Once you have reached 80% LTV, you also have the option to refinance your FHA loan into an FHA Streamline Refinance or an FHA cash out loan. The type of FHA refinance loan you choose will determine whether or not you can take cash out of your home’s equity. The benefits of doing an FHA Streamline include being able to get a smaller monthly mortgage payment and a lower interest rate with little paperwork. An FHA cash out refinance on the other hand, has more paperwork, but with a cash out refinance you can also access cash from your home’s equity to pay for things you need or want like renovations, paying down debt, and more. 

Talk to a Mortgage Advisor about FHA refinance rates and options.

VA Cash Out Refinance

As with FHA cash out refinances, there are also several reasons why you would want to do a VA cash out refinance. VA loan refinances are very similar to conventional home mortgage refinances in that they offer many of the same benefits, including a lower interest rate, cashing out equity, or changing your loan term.

Talk to a Mortgage Advisor about VA cash out refinance rates.

Cash Out Refinance Checklist

Here is a small list of things to remember when doing a cash out refinance. Before you speak with a lender, you’ll want to have the following identification and documents on-hand:

  • Your social security identification card and picture ID
  • W-2s from the past two years and your previous 2 pay stubs showing current and year to date earnings
  • Paperwork showing your current assets may or may not be required. If required, it would include statements of your investments and retirement accounts
  • Proof of debts you owe by showing bank statements from the last two months. This should include any credit card statements, loan statements, alimony or child support, property taxes, and homeowners insurance statements.

Your credit rating. If your credit score is too low, you may not qualify for a cash out refinance. Check your credit score for free.