|FHA Loans -
Cash-Out Mortgage Refinance
The FHA loan program allows for a mortgage refinances of owner occupied
properties. The maximum cash out refinance loan cannot exceed 85% of the appraised value
of the home, which is 5% more than on a conventional loan.
As cash out refinance mortgage is defined as follows: A mortgage
refinance where borrower gets more than $2,000 back after close of transaction, and / or,
any refinance that involves consolidating a second mortgage or equity line that is less
than 1 year old.
You may calculate approximately how much cash out you can get from a
refinance by using the following formula:
- Property Value X 85% = New Maximum Loan*
- Maximum Loan - Amount Owed = Approx. Cash Out Amount
The cash out from your refinance mortgage can be used for any of the
- Home Improvements
- Bill Consolidation (and mortgage if second is less than 1 year old)
- Large Purchases
You may use the cash out refinance for 1-4 unit properties. You do
not have to have an existing FHA loan in order to do a cash-out refinance.
An advantage of the program is if you have had previous credit
issues, there is no minimum FICO score requirement. Also, you may cash out refinance
sooner than you could with a conventional loan after major credit issues such as:
- 2 yrs. after a Bankruptcy vs. 3 yrs. for Conventional
- 3 yrs. after a Notice of Default / Foreclosure vs. 4 yrs. for
Learn more about qualifying for a FHA cash-out refinance by clicking
* New Loan must be within maximum FHA loan limit for area property
is located in.