Austin Cash-Out Refinance

A home is one of the most significant investments for an average American family. Seeing your family living in a comfortable home is the American dream. However, buying a home is one thing, and maintaining it is another. Since keeping up with the payments is hard, we know that the monthly amortizations hinder you from financing home improvements, modifications, and significant repairs.

With that, you can leverage a cash-out refinance to refinance your mortgage with better terms and get extra cash to pay for home repairs and improvements. Capital Home Mortgage offers cash-out refinance to qualified borrowers in Austin. Talk to our Austin refinancing specialists to get started.

How Cash-Out Refinance Works

A cash-out refinance is a mortgage refinancing agreement that uses your home equity to obtain a larger mortgage. Home equity increases as your mortgage mature. However, home equity also increases if the value of your home increases. When you apply for cash-out refinancing, you undergo a similar process as applying for a mortgage. 

For example, let’s assume your house has a market value of $400,000. The outstanding balance of your mortgage is $100,000. Your home equity is $300,000 ($400,000 – $100,000). Since it’s the lending standard that you keep at least 20% of your home equity, the maximum amount that you can borrow in a cash-out refinance is $240,000. However, that doesn’t mean that you can borrow the whole amount.

In this case, you can borrow $150,000 in a cash-out refinance agreement. You’ll pay the $100,000 remaining balance of your existing mortgage and get an extra $50,000 in cash. You can use the $50,000 to pay other debts, renovate your house, purchase new home appliances, or start a new business.

Requirements for Cash-Out Refinance

The requirements differ depending on what kind of product you choose. If you currently have an FHA loan, you should proceed to FHA refinancing with a minimum credit score of 580. You can only access FHA refinancing for FHA loans, not conventional private loans. VA refinancing also requires at least a 580 credit score. The credit score requirement increases to 620 for traditional refinancing.

Even if you meet the credit score requirement, you still need to check your home’s market value. You need to hire an appraiser to determine your home’s current value and assess if it’s enough for cash-out refinancing. Also, review your monthly debts and payments through the debt-to-income ratio. If you still have a lot of credit card installments, it’s best to postpone the application since a high DTI ratio might affect the success of your application. The ideal DTI ratio is between 37% to 45%.

Tap into Your Home’s Equity with Cash-out Refinance

At Capital Home Mortgage, we help our clients get the best mortgage terms. If you need money to consolidate debt or invest in a business, let’s explore how our cash-out refinancing product can help you. Call us at (512) 237-7400 and get started with the application.

We look forward to providing your next cash-out refinance in Austin.