As housing values all across the country have increased in recent years, the opportunities to get government-backed cash out refinances have increased too. For homeowners with substantial equity in their homes there are numerous reasons to be interested in a cash out refinance: Home improvements, increasing cash reserves, paying down expensive debts, or any number of other reasons. The primary benefit of a cash out refinance is it allows borrowers to tap into the equity of what is likely their biggest asset — their home — at an interest rate that is normally lower than they could get in any other way.
There are several government-backed programs that allow for cash out refinances.
Fannie/Freddie conventional cash out loans — With Fannie Mae and Freddie Mac you can get up to 80% of the appraised value of the home as cash out without adding mortgage insurance fairly easily, and you can get up to 90% cash out with no mortgage insurance with a bit more effort. Cash out on investment properties is possible too but usually not above 75% of the value of the home.
FHA cash out loans — FHA allows up to 85% cash out. However FHA mortgage insurance premiums can be steep so it is important to run the numbers on FHA cash out refinances up front to be sure they make sense.
VA cash out loans — Military veterans with VA eligibility can get up to 100% cash out through the VA mortgage program if they are paying off mortgage debt and up to 95% if the cash out is for any other purpose.
Home equity line of credit (HELOC) or fixed 2nd mortgage — In situations where homeowners already have an excellent first mortgage, sometimes the best solution is to tap the home equity using a HELOC or 2nd mortgage.
Contact us today by filling in the contact form in the sidebar to learn more about your options with government-backed cash out refinance programs.