Take Cash Out

How Does a Cash-Out Refinance Work?

With a cash-out refinance, you pay off your original loan with a new loan. Plus, you get additional cash. Your new mortgage balance will be more than the one you’re paying off. You can use the money you receive to:

• Pay off higher-interest loans and credit cards
• Make home improvements
• Invest in another property
• Anything you choose

If you’re burdened with debts and your budget is too tight, pay off those debts and reduce your monthly overhead. Most families find having lower monthly payments is a huge stress reliever.

Cash-Out Refinance Requirements

In addition to qualifying for the mortgage loan, your home has to have enough equity for you to access.

The maximum loan-to-value varies.

• VA — LTV for a cash-out refi can go up to 100%
• Conventional — 80%
• FHA — 80%

If you have an FHA loan, we try to refinance you into a conventional loan to remove your PMI to save you even more money.

What is the Difference Between a Refinance & a Cash-Out Refinance?

With a straight refinance, you only change the rate and term. But with a cash-out, you can change the rate, term, plus get money back.

Cash-Out Refinance Rates

If you compare a rate and term refinance to a cash-out, you will see that the refinance rates can be slightly higher. Compare rates and see if it’s worth getting money back or if you’d just instead do a rate-and-term refinance.

The other option would be to do a rate-and-term refinance and, once that’s complete, get a home equity line of credit or home equity loan. Although we don’t do them at Homestead, your local credit union does.

Cash-Out Refinance Closing Costs

One of the great things about Homestead’s cash-out refinance is that there are no out-of-pocket (NOOP) costs. Typical closing costs include:

• Underwriting fee
• Credit report fee
• Flood certificate
• Title & recording fees
• Misc. state & transfer taxes
• Homeowners insurance
• Property taxes
• Points if you buy down the rate

The good news is that Homestead wraps these fees into your loan, so you don’t have to pay for anything out of pocket. At the beginning of the refinance process, your loan advisor will give you a Loan Estimate listing all the fees. When it comes time to close, they’ll give you the Closing Disclosure that lists the final fees so you can compare your estimate with the actual fees. Throughout the process, we’ll keep you 100% informed and answer any questions you have.