If you're considering tapping into your home's equity to fund your dreams, consolidate high-interest debt, or make necessary improvements, you're in the right place.
Our expert team has compiled a comprehensive list of frequently asked questions to guide you through the ins and outs of cash-out refinancing. Explore these FAQs to gain clarity and confidence in your pursuit of a brighter financial future through cash-out refinances and HELOCs.
A cash-out refinance involves replacing your existing home mortgage for a larger one. This lets you receive the cash difference between your current loan and the new loan. The cash amount depends on how much equity your home has built up. You can use the fund for various purposes, from home improvement projects to paying off high-interest debts or fulfilling other financial requirements.
How much cash can you get with a cash-out refinance?
Lenders usually allow homeowners to borrow up to 80% of your home’s value for conventional home loans, or up to 85% for FHA loans. Additionally, cash-out refinances back by the U.S. Department of Veterans Affairs (VA) can extend to 100% of the home’s value. Keep in mind, these limits can fluctuate based on factors such as your credit score, mortgage type, and property type.
How does a cash-out refinance work?
The cash-out refinance loan process is very similar to a traditional refinance. You will substitute your existing loan with a new one. Specifically with a cash-out refinance, you will withdraw a portion of your home’s equity as a lump sum. The lender will combine the amount withdrawn with the remaining balance of your original mortgage, resulting in a new loan balance. There are limits on how much you can withdraw from your home’s equity, so please reach out to a Home Loan Specialist to discuss your unique circumstances.
Home Equity Line of Credit (HELOC) FAQs
What is a home equity line of credit (HELOC)?
A HELOC allows you to borrow money using the equity or value of your home as collateral. This loan operates similarly to how a credit card works due to it being an “open-end loan.” You will withdraw funds (from the loan) and repay as needed over a set period of time. When you use your funds, your available balance goes down. As you make payments on your outstanding loan balance, your available funds will replenish.
How can I use a HELOC?
You can use a HELOC in the same ways as a cash-out refinance such as home improvement projects, paying off high-interest debts, home repairs, or other financial requirements.
How do HELOC rates work?
Your interest rate will change throughout the life of the HELOC. The initial rate you are offered for your loan is just the introductory rate. So, your interest rate can (and likely will) fluctuate regularly. This means the interest that you owe can change several times throughout the life of your loan and impact your overall balance.
