If you've been in your home for some time or you've made some upgrades – or both, chances are your home may be worth more than what you owe on your mortgage. The difference between your home's value and what you owe on it is your available equity, and when you choose a cash-out refinance, you can gain access to that extra equity.
Refinancing with a loan backed by the Federal Housing Administration (FHA) could make it easier for you to qualify, especially if you have less-than-ideal credit, variable income or a higher debt-to-income ratio. That's because FHA loans tend to have more relaxed lending guidelines.
The FHA was created in the 1930s to make home ownership more affordable. The FHA doesn't actually loan the money; it simply underwrites, or insures, loans so lenders feel more comfortable lending out money to borrowers they might otherwise consider to “risky” to qualify for loans. In addition to underwriting mortgages for purchasing a home, the FHA also provides refinancing loans with the same relaxed requirements. Plus, while most lenders prefer to write loans no higher than 80 percent of the home's value, the FHA allows loans of up to 85 percent of the value, so you can gain access to more of your equity.
There are lots of reasons to tap into your home's equity, including:
Cash-out refinance mortgages can provide you with the financial flexibility you've been looking for, and if you can lock in one of today's lower rates, the deal can be even sweeter. If you're considering a cash-out refi, this may be the perfect time to lock in your rate. And at McMullen Group, we're ready to help ensure your FHA cash-out refinance process goes as smoothly as possible. If you have any questions, give us a call at 781-361-2625 or use our online contact form and we'll get in touch with you.