Are you thinking of renovating your home or need cash for the biggest expenses? If you need the biggest expense, your home can be a valuable asset. If the value of your home is greater than your loan amount, you can apply for FHA cash-out refinancing.
Cash-out refinance will repay your old loan and give a new loan on your home equity. With the new loan amount, you will be able to repay the old mortgage and the remaining money will be refunded to you after closing.
Cash-out refinancing is paid on home equity and you can use the cash at any cost.
Since this note is secured by your home, you must spend cash on a good investment.
This is the best option for refinancing your mortgage. If your existing mortgage is not an FHA mortgage, you can still qualify for FHA cash-out refinancing.
However, there are some qualifications that you need to meet:
How much cash will you get from FHA Cash-out Refinance Loan?
To qualify for the FHA Cash-out Refinance Loan, you must have the remaining 20% of your home loan equity. Existing loans can never exceed 80% of the value of your home. This condition limits the size of your loan and how much money you can “cash out”.
Estimate the current value of your home to determine how much financing you will receive on your home equity. A professional appraiser will help you estimate the current value of your home. Check the mortgage statement to know the remaining equity in your home. This will let you know how much you owe.
For example, the current value of your home is $ 250,000 and your existing mortgage debt is $ 150,000. You can borrow 80% of your home equity and get $ 200,000 in cash. Then the remaining equity in your home will be 20% which is $ 50,000 in cash.
So your new mortgage is $ 200,000 and your old mortgage is $ 150,000. After paying off the old mortgage with new mortgage cash, you have $50,000 left over in cash.
The FHA has closing costs that you can pay in cash or roll into a loan. For example, if the closing cost of your loan is $ 6,868, you will get a total cash of $43,132.5.