Did you know that U.S. home prices increased by more than 6% during 2017? According to mortgage experts, Black Knight, there is “$5.4 trillion in total tappable equity”, which is 10% more than the previous peak in 2004. Increasing home values now offers many households an opportunity to improve their financial situation through a cash-out. If you need money to improve your financial situation, including home improvements, consolidate debt, or pay for college expenses and have equity in your home, then consider a cash-out mortgage.Get a Mortgage Quote Now
A cash-out mortgage combines a traditional (rate/term) refinance with an additional sum above your current mortgage balance. Instead of taking out a second mortgage (either a Home Equity Loan or a Home Equity Line of Credit) you take out one mortgage that pays off your existing loan and leaves you with money in the bank.
The most significant factor that affects your home equity is the housing market. Rising home prices lead directly to an increase in home equity. One way of tapping into the wealth and fixing one mortgage payment for all of you home loans is to take out a cash-out mortgage.
How can you take out more money than you owe? A cash-out mortgage is based on the amount of equity you in your home. Mortgage lenders use a loan to value ratio (LTV) to determine how much cash you can take out. A purchase mortgage or a standard refinance mortgage is capped at about 95-97% of your home value. However, a cash-out mortgage is limited to 80% on a conforming loan for a single unit primary residence.
Do you Need Excellent Credit? In addition to the LTV, mortgage, lenders will look at your credit history, credit score, qualifying income, and debt to income ratio (DTI). The most popular cash-out mortgages today are conforming loans backed by Fannie Mae and Freddie Mac, which require a minimum score of 620; However, you may be surprised to know, but you can qualify with less than good credit scores from lenders who are offering non-QM cash-out mortgages.
Do you have equity in your home? Do you need cash to consolidate debt, make home improvements, or pay for college expenses? Use Bills.com's Cash-Out Refinance Calculator and find out how much you can borrow and your monthly payments.
Bills.com recommends that you consider taking out cash from your home in a manner that best improves your financial situation. The most important reasons to take out a cash-out refinance are Debt Consolidation, Home Improvements, and Home Repairs, Finance College Expenses, and Pay Big Bills.
A cash-out can significantly improve your lifestyle. Maybe you accumulated debt? Cash-out mortgage debt consolidation is a great way to get a reduced interest rate and affordable monthly payments. Did you push off essential repairs? A cash-out refinance can let you complete home repairs such as a new roof, new flooring, or badly needed appliances.
One thing to keep in mind: Don’t use the money frivolously. A cash-out mortgage is not a gift. Consider your overall financial situation. Do you want cash for an expensive vacation? In general, it is a bad idea to finance consumption items using a long-term loan.
Do you need extra cash? Maybe you are considering a debt consolidation loan? Get more information about cash-out mortgages.
Learn about cash-out mortgage trends in 2018. A combination of rising home prices, increasing incomes, and attractive but higher mortgage rates make for both opportunity and a need to carefully analyze the situation. Maybe you can benefit from a cash-out refinance? Get more information about the latest trends.
Arizona home prices plunged in the 2007-2008 housing crisis. Home prices in many areas of Arizona rebounded, giving homeowners stronger equity positions. It is now possible to take a cash-out refinance and lower interest and/or lower your monthly payment. Check out examples from the Pheonix area.