College Station Cash-Out Refinance

Here at Capital Home Mortgage, we pride ourselves on providing a comprehensive lineup of mortgage products, including the Cash-Out Refinance program, which lets you convert your home’s equity into cash. Essentially, you get a new mortgage to repay an existing one and take home the excess money. 

To illustrate, let’s assume your home’s market value is $250,000. Suppose you have an outstanding loan balance of $100,000 from a previous mortgage. In that case, you can choose the cash-out refinancing option to pay off the outstanding balance and receive the $150,000 excess cash, which you can spend on home improvements, debt consolidation, investments, or other financial obligations. 

However, one thing to keep in mind is that with a mortgage refinance; you’ll repay a larger loan with different terms. As such, it’s essential to carefully weigh the pros and cons before committing to the program. 

Here’s what it entails.

• Credit Score Requirements

The minimum credit score requirement for refinancing is 580. It would be best if you had a score of 620 or above to get excess cash from the new mortgage. A refinancing agreement often involves extending payment terms or reducing interest rates. You can loan a higher amount to receive extra money with cash-out refinancing.

• Debt-to-Income Ratio

Your current DTI ratio must be less than 50% to qualify for cash-out refinancing. For first-time loans, the ideal DTI range is 36% to 43%. However, if you want to increase your chances of getting approved, try to pay off some debts to reach the healthy DTI range. Even if your DTI is below 50% but higher than 43%, lenders will still raise an eyebrow at your financial position.

• Home Equity Requirement

To qualify for cash-out refinancing, having sizable home equity is crucial. Your home equity is the difference between the outstanding loan balance and the property’s fair market value. For example, you took a $200,000 loan for a property worth $300,000. Assuming you still owe $75,000, your home equity is $225,000.

The home equity will be the basis of the cash-out refinancing. Fluctuations in interest rates and underwriting may affect the loan-to-value. Let’s say that the lender approved up to 94% of your home equity. The maximum loan amount will be $211,500.

Cash-Out Refinance vs. Home Equity Loan

Cash-out refinance takes a new mortgage to pay off an existing one. You get a second mortgage with the home equity as collateral in a home equity loan. To illustrate, let’s assume that the applicant has an outstanding mortgage of $100,000 and home equity of $150,000. In cash-out refinance, the applicant can get a loan based on the home equity and pay off the $100,000.

The applicant will get a second loan with the $150,000 equity loan as collateral in a home equity loan. In the case of a home equity loan, the applicant will have two debts, whereas in cash-out refinancing, there is only one debt.

Apply for Cash-Out Refinance in College Station Today

At Capital Home Mortgage, we offer a streamlined cash-out refinance process, competitive interest rates, and low processing fees. As a direct mortgage lender, we can provide flexible underwriting and quicker approvals since we handle every aspect of the loan process, including funding. 

Let our mortgage specialists help you get the financing you need from your home’s equity today. Get a free quote by calling (979) 393-0049. We look forward to providing your cash-out refinancing in College Station.