New American Funding Cash-Out Refinance Loans – 2019
New American Funding cash-out refinance loans: The decision to take equity from your home to fund a college education, vacation, or a home improvement project is major. When you are considering this significant financial commitment, it helps to work with a mortgage lender who is committed to making sure you understand the benefits of tapping into your home equity, the pitfalls associated with this type of decision, and what other options are available to you. This is one reason so many people turn to New American Funding when they are looking for a suitable cash-out refinance loan.
What is a Cash-Out Refinance?
The difference between what you owe on your home and the value of your home is known as your home equity. Equity is established in two ways, first, when you make mortgage payments, a portion of your payment is put towards the equity, and second when the value of your home increases, the equity increases because the amount you have borrowed remains consistent. A cash-out refinance takes the equity in your home and puts some of that equity in your pocket when you take a cash-out refinance.
Keep in mind, when you do this, you are exchanging one mortgage for another. Your current mortgage would be paid off and you would take on a new mortgage. The cash difference between the new loan amount, and the amount to be paid off would be the “cash-out” portion of the refinance.
Benefits of a Cash-Out Refinance
A cash-out refinance offers borrowers several flexible options. Because the cash is provided to you in a lump sum, there are several things you could do including purchasing another property for investment purposes, buying a vacation home, funding your retirement plan, or paying education expenses for you or for your child. You may also decide to pay off higher-interest rate credit cards which could mean you have a higher credit score, buy a new car, or you may simply want to put the money aside for a rainy day. Some homeowners also elect to use the cash they take out of the equity in their homes to start a new business.
One of the most significant benefits of a cash-out refinance is you get to decide what to do with the money. Additionally, in some cases, you may be able to reduce your current interest rate or rewrite a current adjustable rate mortgage into a fixed-rate mortgage. You should discuss these, and other benefits of a cash-out refinance mortgage with your mortgage lender.
Requirements for Cash-Out Refinance Loans
As with any mortgage loan, there are specific requirements for a cash-out loan. The first being you have enough equity in your home. Because every loan is different, the lender may have restrictions on how much cash you can obtain, and in some instances, they may insist you pay down certain debts as a condition of the cash-out refinance.
Your credit score will have an impact on whether you are eligible for a cash-out refinance. The better your credit score, the more likely that you will be eligible to refinance your home. Taking the time to make sure there are no errors on your credit report before you apply for a cash-out refinance is a good idea.
To determine how much equity you have in your home, in most cases your home will have to be appraised. Some loan programs may waive this requirement but may restrict the cash-out portion of the refinance.
Cash Out Refinance Options
The good news is nearly any homeowner who has a home loan is eligible for a cash out refinance if they have good credit, equity in their home and they are willing to go through the refinance process. Cash out refinances are available to borrowers who have FNMA, VA, FHA and Home Equity Lines of Credit (HELOC). Whether your mortgage is a convention loan or a jumbo loan, you may still be eligible for a cash-out refinance.
There are also specialized cash-out programs which you may be eligible for including the FHA 203k renovation loan, and VA backed cash out refinancing. In some instances, if you are eligible for a VA loan, you may be able to use up to 100 percent of the equity in your home while enjoying a low interest rate and get the added benefit of not having to pay for private mortgage insurance (PMI).
Many homeowners worry about medical debt, funding their child’s education expenses, or they are simply tired of paying high interest rates on credit cards. These are the ideal situations where a cash-out refinance can be beneficial. If you are considering tapping the equity in your home for any reason, you can count on New American Funding to help you find the right loan program to suit your needs. Contact one of their many branch offices today and let them help you take advantage of the equity you have worked hard to build up over the years of home ownership.