2016 Cash-Out Refinance Guidelines all depends on the type of mortgage loan program that the borrower selects. As with most cash-out refinancing options, the loan-to-value (LTV) and equity within the home is key to getting any cash out of a property. The 2 most common types of programs for a cash-out refinance is either through FHA or a Conventional Loan. Aside from LTV requirements, 2016 Cash-Out Refinance Guidelines also states there needs to be seasoning requirements as well that need to be followed. The first step in any cash-out refinance is to determine what the value of your home is and what the property itself is worth. Now since the recession happened, borrowers may be surprised that their home value comes in less than what they had hoped. However, home values are on the rise as of late so hopefully there are realistic expectations of what your home is worth.
If you live in areas like Florida, California, Illinois, Texas, Nevada, and Arizona for example, values have been appreciating at higher rates than some other areas of the U.S. In areas of California, Florida, and Texas some people have seen 30%+ appreciation in their home values in the last 3-4 years time since home values bottomed out during the recession. In a few pockets of southern Florida in the Miami-Dade county and Palm Beach area gone are the days of seller’s concessions needed in order to sell homes. The demand is so high that seller’s don’t need to give any money to entice buyers and get deals done. Given this, it is great news for homeowners who are looking for a cash-out refinance in order to improve their homes, pay off credit cards, or even use the proceeds towards the down payment on a 2nd home or investment property.
According to 2016 Cash-Out Refinance Guidelines borrowers who purchased a home with an FHA loan are eligible to do a rate and term FHA refinance mortgage after just 6 timely monthly payments. However, for a cash-out refinance mortgage on an FHA loan, the borrower needs to have made 12 timely monthly payments. There is also a 12 month waiting period after closing on an FHA loan before you can do a cash-out refinance. There are also loan maximums with regards to a cash-out refinance, 2016 Cash-Out Refinance Guidelines state the maximum the LTV ratio can be is 85%. For people who either put a lot of money down, or have considerable equity appreciation, getting cash-out shouldn’t be an issue.
Fannie Mae and Freddie Mac are the 2 government sponsored entities (GSE’s) that set the mortgage lending guidelines to be abided by in the United States. Their guidelines are what conventional or conforming loans adhere to. 2016 Cash-Out Refinance Guidelines for conventional loans requires a 6 month seasoning period for a conventional borrower to then refinance their home into another conventional loan. This is where conventional cash-out refinance differs from FHA because FHA requires 12 months before a cash-out refinance can be done. The other area where the conventional cash-out refinance differs from FHA is the fact the LTV can only be 80% where FHA is 85%.
2016 Cash-Out Refinance Guidelines also are applied to other mortgage products like Jumbo loans and VA loans. With regards to Jumbo loans (loan whose limits exceed Fannie Mae/Freddie Mac lending guidelines) they can only have an LTV of 75% in order for a cash-out refinance to be processed. VA loans are very lenient when it comes to cash-out refinances. 2016 Cash-Out Refinance Guidelines for VA loans state that borrowers can go up to 100% LTV. Borrowers may run into some lenders who only want to have an LTV of 90%, but this is because they have their own Lender Overlays. If you need a lender without overlays, you need to allow me to process your loan as we don’t work with overlays.
If you are in the market for a cash-out refinance on an FHA, Conventional, Jumbo, or VA Loan, look no further and reach out to be ASAP at 888-900-1020, email me at firstname.lastname@example.org, or visit my website www.loanconsultants.org.