What is an FHA Cash Out Refinance?

FHA cash out refinance is a cash out mandated by the federal government after a homeowner under the federal administration has reached enough equity (usually after 12 months) to receive a lump sum of cash. This is a great way to utilize cash resource in times of homes increasing in market value, and you have more leeway to appropriate funds for your own reasoning. Here are some basics of refinancing your home. Basic FHA Cash Out Refinance Requirements As with all federally backed loans, you will need addresses of where you have lived in the past 2 years, your employer’s name and addresses, and the amount of your gross monthly salary. Additionally, you should have your W2s for the past two years, and income tax forms submitted for the last two years. Make sure all payments made in the last 12 months are not late for more than 30 days after each monthly fee. Whether you are trying to get pre-approved or go on with the application process, this is useful information especially for lenders. Although a credit score is not necessary for federal loans, the lender may still ask for your credit score as a way to see the risk involved for your borrowing needs. Seeing as a cash out allows you to take out a bigger loan, lenders want to limit as much risk as possible.   What does federal cash out refinance allow the borrower to finance (FHA limits)? Most federal loans limit what you can do with your funds. For example, a streamline refinance program refinances a mortgage to a lower rate. However, a borrower...

4 Tips to Get the Most Out of Your Cash Out Refinance

Have you put a solid amount of equity in your home and don’t have a clue what to do with the extra money? Why not consider cash out refinance? The cash out refinance is a solid way of getting money out of your own home. You never know if a tornado can blow over your house and you need an emergency fund to help pay for bills. Trust me; anything is possible when it comes to weather these days. The point of all this is to be prepared! How to Qualify for Cash Out Refinance   Having a stable mortgage is very important. It’s like building a home; your foundation is important because the house will fall without the support. Before you refinance the home you should have up to a year of on time mortgage payments. Any blemishes to your record will easily put you on a blacklist from lenders. If you have to go to through your credit records and get everything up to date make sure you do it quickly and follow up on any bad payments. Additionally, you should send the lender all of the information regarding your employer’s name and addresses, the amount of your gross monthly salary and have your W-2 form filled out thoroughly. Every transaction, purchase, and even gift should be documented on your W-2. In certain cases a credit score is not necessary for federal loans but it all depends on the lender. Why Do Homeowners Bypass A Conventional Cash Out or Federal Streamline Plan? (FHA Limits) The conventional cash out option is a great method to acquire a sum from your equity....

FHA Cash Out Refinance

* Note: You do not need to have an existing FHA Loan in order to get a FHA cash out refinance. * Note: The FHA cash out refinance does not follow the same guidelines as the FHA streamline program. If you do the FHA Cash Out Refinance, you will need to get fully qualified for the new finance amount.   The FHA cash out refinance was created to allow home owners the ability to borrower against the equity of their home. FHA will insure cash out refinances up to 95% of the home’s current appraised value. Simply put; if your home appraises at $100,000 and you owe $70,000, then when you get an FHA cash out refinance you’ll borrow $95,000 to pay off the original $70,000 and keep $25,000 for yourself before taking out any closing costs. Benefits of an FHA Cash Out Refinance No minimum FICO Score requirements. There are no regulations on what you spend the cash on… It’s your money– do with it what you like. You can get loads of cash at a low rate. Refinance up to 95% of the appraised value on your current residence– this is 5% greater than any other kind of cash out refinance. Refinance up to 85% of the  appraised value of other property types. You can get a FHA cash out refinance 2 years after a bankruptcy and 3 years after a notice of default. How the Cash Out Process Works The FHA cash out refinance works like the majority of other home refinance programs except that a minimum FICO score is not required for FHA to insure...

It’s Road Tripping Time With This Cash Out Refinance

Cash Out Refinance It’s Road Tripping Time With This Refinance To first understand how a cash-out refinance works, you must also know what equity is. Equity is the amount of your home that you already own. When you do a cash-out refinance you essentially “cash-out” the equity in your home. For example, let’s say you take out a mortgage for $200,000 and within five or so years you pay off $30,000 of it. You could take out a new loan, through refinancing, for $220,000 and part of the new loans value would convert into “cash” to use as you wish. A Solution to Financial Woes Homeowners often have a chunk of change tied up in their monthly mortgage payment so it can be hard to find enough leftover money to pay off other loans. This is where the cash-out refinance comes in handy. Let’s say you have an auto loan that is at a higher interest rate than your mortgage and you would like to get it paid off ASAP, but are finding that monthly payments only make a dent to your initial loan amount. If you were to cash-out the equity in your home through a cash-out refinance, you could pay for that vehicle entirely. This is the case for many other financial burdens as well: credit card debt, hospital bills, a wedding ring (wink, wink). Some people even choose this type of refinance so that they can pay for their child’s college tuition or taking the vacation they have always dreamed of. The Downside to a Cash Out Refi There are not many times in a person’s...

4 Tips to help you refinance with the cash out program

Are you looking for a great way to use extra equity in your home? Maybe you’ve never considered refinancing, and you see that there are some options on the table. Find out all of the possibilities available to you before you refinance with cash out. Here are some tips to help you along the way. Keep your mortgage in great standing before a cash out refinance Building your lender’s trust is not an easy thing to do especially in the realm of borrowing a substantial amount of money. Of course, you don’t want to make your lender’s headache worst by going into default or missing some payments. Before you consider refinancing, you should make sure that you keep on time payments for at least 12 months. Keep all of your transactions well documented because the lender may have questions on certain things you did not relinquish on your forms. Remember, trust is everything and the lender has the final say for approving your mortgage. Be realistic. If you find that you are having trouble making payments, then try to build more stability before a cash out refinancing. What’s your main reason for use a cash out method? A typical refinance with cash out allows you to do the following: pay for school expenses, pay your auto loans, finance your dream vacation, and keep an emergency fund. You might have 10% to 20% equity in your home. That’s a considerable amount depending on the value of your home. You have to ask yourself the question, “How does this pay off in the long run?” Of course, going to school is...