Are you a current homeowner interested in refinancing your home, and trying to determine the best refinancing option for your situation? You may want to consider a cash-out refinance, which basically replaces the mortgage you currently have with a new loan that is for a higher amount than you owe on your house, and you keep the cash difference. If you are interested in refinancing your home in Jacksonville, Florida, North Star Mortgage Network, Inc. can help. Read on to learn more about cash-out refinancing.
Cash-Out Refinance – Essential Information
As you continue to make mortgage payments, the amount of equity in your home increases. In a cash-out refinance, you refinance your existing mortgage for a new one that is a larger amount than what you owe, and you get to keep the cash difference. Homeowners that choose a cash-out refinance typically use the extra funds to make home repairs or renovations on the home, to pay off debts, or to subsidize other expenses. When applying for a cash-out refinance, be prepared to have your current financial situation evaluated, and be prepared to provide documentation as verification in order to ensure lenders that you will be able to pay back the loan.
Cash-Out Refinance Advantages and Drawbacks
A cash-out refinance can offer many advantages for certain borrowers, however, it may not be the best option for others. One benefit of a cash-out refinance is that you may be able to refinance your home at a notably lower rate, and if you use the money to renovate your home, it could raise the value of your property. Also, if you are in a situation where you have a significant amount of high interest debt, a cash-out refinance may help you pay that debt off faster. One possible downside to a cash-out refinance is that you will be required to pay for closing costs on the new mortgage and the amount of time you will have to make mortgage payments will be extended.
Cash-Out Refinance Application Requirements
When you go to apply for a cash-out refinance, some typical requirements to consider are:
- Lenders will examine your credit score, and generally require a credit score of 620 or higher for a refinance
- Lenders will need you to provide income verification and financial information, and it is helpful to have all of your documentation organized before you apply
- Lenders will look at your loan-to-value, (LTV), which is a ratio used by lenders to determine how much risk they are taking on, and it cannot be over 80% of your home’s value
Get Help Applying for a Cash-Out Refinance
If you are interested in learning more about how to refinance your home with a cash-out refinance in Jacksonville, Florida, contact North Star Mortgage Network, Inc. today. We can work with you to help determine the best financing option available.