Cash Out Refinance
Taking cash out of your home remains the primary reason people refinance. Property has appreciated in value in every area, and people are deciding to do a cash out refinance to use their "dead equity" to reduce debt, pay for home improvements, or make major purchases. We offer many cash out refinance products to unlock the equity in your home or investment property.
Cash Out Refinance
In a cash out refinance, determine the balance of your mortgage, and the amount of cash you are taking out lus any closing costs (remember, I do not charge origination fees so these costs are as low as possible). The total is your loan amount. An appraiser will determine the value of your property which will be used to determine your Loan to Value (LTV). I have loan programs which will allow you to borrow 80, 90, or even 100% of the value of the home in this "Cash Out Refinance" transaction.
One way to make a refinance work for you is to refinance for more than the balance remaining on your old mortgage -- in effect, tapping your home equity, or "cashing out," . Thanks to favorable rates, you may be able to do so without increasing your monthly payment. For example, at 8.5%, the payment on a $200,000, 30-year fixed-rate mortgage is $1,538. But at 7.5%, that same payment lets you borrow nearly $20,000 more.
One way to use the extra cash is to pay off any higher-rate loans you have. If you are carrying a $15,000 car loan at 10% and are making minimum payments on a $10,000 credit-card balance at 17%. Your payments could total $680. Assume you refinanced your mortgage, taking out an additional $25,000 to pay off your car and credit-card loans. At 7.5%, your additional monthly mortgage payment would be only $175, you come out $505 ahead ($680-$175=$505).
Of course, all the extra money needn't go for paying off debts. One client refinanced an ARM for a fixed-rate loan, they increased their mortgage by $34,000, from $106,000 to $140,000. Using $2,000 of the proceeds to pay their refinancing costs and another $18,000 to pay off a 10% home-equity loan, which had cost them $250 a month. They spent the remaining $14,000 to build a garage and did all this for just $19 a month.
A second trust loan can be a very useful tool if you have a low rate first trust but still want to use some equity in your home.
Some useful Second Trust programs include:
1)A traditional second allows you to borrow up to 95% of your appraised value. The program allows a debt to income ratio of up to 45%. If your ratio is too high, some debt can be paid at closing lowering your ratios.
2) An expanded second trust allows you to cash out up to 100% of your appraised value. Please note that your interest rate will increase as the loan to value increases.
3) A 125% second trust allows borrowing up to 125% of the appraised value of your home. Take the value of your property, multiply by 125% and subtract the balance of your first trust. The result is the total you can borrow. With the recent increase in values expected to continue, many homeowners will see enough increase in value to cover the amount borrowed in a very short time. Not available on investment properties at this time.
4) A stated income second trust is available. We verify your employment but no attempt is made to verify your income. The rate is increased by 1/2 to 3/4 % but the loan is a useful tool for many.
We offer you the ability to refinance into several unique programs accommodating borrowers with non traditional income or asset situations. Please visit my No Docs page.
Learn more about Cash Out refinance closing costs.
I have included a page on mortgage documentation requirements which may be useful when planning your refinance.
Find out more about Streamline Refinancing
Learn more about "No Cost Refinance" options.
More about how to eliminate PMI
As a Certified Mortgage Planning Specialist, I offer an analysis of your situation today can make suggestions on how small changes in how your consumer and mortgage debt is structured today can have a life changing effect in the years to come. Read more about this free, no obligation service.
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