Killeen Cash-Out Refinance

A mortgage refinancing option known as a cash-out refinance enables homeowners to convert a portion of their home equity into liquid funds. A new mortgage is taken out for an amount higher than the outstanding balance on your current mortgage, and the difference between the two is paid to you in cash.

What is a Killeen Cash-out Refinance?

You can borrow more than the outstanding principal of your loan through cash-out refinancing. For example, if your outstanding balance in the current mortgage is $200,000, but the market value of your house is $500,000, you can borrow up to 80% of the value of your property. That gives you a total of $400,000 as your new loan. You pay off the $200,000 old mortgage and get $200,000 additional cash. However, you now owe $400,000 instead of $200,000. You get the $200,000 three days after closing on the new loan.

Killeen Cash-out Refinance Rules

Cash-out refinancing can be tricky since you’re borrowing more than what you currently owe from an existing mortgage contract. Section (a)(6) of the Texas Constitution permits homeowners to borrow against the equity in their primary residences. 

• Credit

Conventional loans require a minimum FICO score of 620 to qualify for a cash-out loan.

• Loan-to-Value

The maximum loan amount on a Texas Cash-Out is limited to 80% of the property’s appraised value or 80% Loan-to-Value (LTV). 

• Debt-to-Income Ratio

The borrower’s debt-to-income (DTI) ratio must be 43% or less, and the property must have deep equity to get a Texas cash-out loan.

• Waiting Period

Borrowers can be eligible for a Section (a)(6) loan in Texas after they’ve had their mortgage loan for at least six months.

• Limited Closing Costs

A lender’s closing fees cannot exceed 2% of the loan amount. This doesn’t include third-party costs like an appraisal fee, title insurance policy, attorney fees, etc. The 2% rule only applies to the lender’s origination fee, processing, and underwriting fees.

Apply for Cash-out Refinancing Today

Capital Home Mortgage offers cash-out refinancing to clients in Killeen through direct mortgage lending. We process your loan directly and fund it after approval. Call our experienced loan officers in Killeen at (254) 213-7343.