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Happy Monday everyone!
The mortgage world is different from last time you did a cash-out refinance. Underwriting is stricter, the appraisal process is different, and there are steeper mortgage rate adjustments. Today I’ll update you on the issues you’ll face in today’s market.
Find out what to look for in today’s episode:
Here are the three big challenges you may face with cash-out mortgage refinancing:
1. The appraisal
It’s no secret that underwriting is more strict than it was in the past, and this is especially true for a cash-out refinance. The appraisal will be under even more scrutiny than with a rate and term refinance (If you’re curious what the difference is, check out this episode)
Underwriters may even ask for a field review, which is essentially a second appraisal. If they ask for one of these, the additional cost is on you.
The largest factor is your loan to value ratio (LTV). The higher your LTV, the harder the underwriting process can be.
2. Debt to income ratio (DTI)
If you are paying off debts on your cash-out refinance, it will not eliminate those payments unless you actually close the account you are paying off.
Paying off a car loan is not the same. Installment loans are always closed when paid off. The issues arises on revolving debts or credit cards only.
3. Higher interest rates
You will most likely be offered a higher rate on a cash-out loan, depending on your LTV and credit score. You’ll want to keep this in mind as you weigh your options. An experienced loan officer should be able to give you that information up front.
Let’s change the way people shop for a mortgage…forever!
PS. To ask a question, get advice, or find out if you’re getting the best deal possible on your loan, just post a comment below. Daily comparison rates, calculators, and other cool features are available in the free Rates in Motion LoanApp by going to your smart phone and clicking on this link, activation code is 9203780002