How To Get Cash Out Of Your Home – 1 of 4 part series on getting cash out of your home
If you’re in need of extra cash, why wouldn’t you look to your biggest asset, your home, to access some?
A cash-out refinance loan allows you to replace your current mortgage with a new loan that is higher than the amount you currently owe on your home. That extra money becomes cash that you can use any way you like.
Because a cash-out loan is different from a traditional refinance, you’ll have different application requirements to meet. What do you need to know about getting cash out of your home? Read on to find out.
Your Home Equity
Your home equity is the amount you’ve paid towards your home, or the home’s appraised value minus your outstanding balance. You’ll need to have equity in the home in order to qualify for a cash-out refinance, and your loan amount will typically not be more than 80% of your equity.
As with any line of credit, your credit score will be checked to make sure you are a dependable borrower. Some lenders will accept scores as low as 620, but as always, the higher your score, the better your rate and terms will be. Lenders will look for late payments in particular, and they’ll want to see a full year of on-time and responsible bill pay.
Whether you’re buying real estate in Orange County or looking to refinance your home, lenders need to know that you have a steady income and stable finances. If you’re struggling to pay your current bills, lenders won’t want to give you more money on top of what you already owe.
Your Home’s Appraised Value
Finally, your home’s appraised value is the benchmark for your cash-out refinance calculations. Lenders want to know the appraised value of the home, which means you’ll need to have a professional survey your property and it’s worth. Be sure to point out improvements you’ve made since purchasing the home that has added to your equity stake.