Consider an FHA Cash Out Program
- Mar. 6, 2019
- Taylir Paynter
- Home Loans
Invest in your dreams with the money available in your home
Tapping into your home’s equity responsibly is one of the best ways to take the reins of your finances for your immediate needs and emergencies – or for dreams of tomorrow. Accessing the value that you’ve built up in your house through an FHA Cash Out Program is a tremendous way to do just that.
An FHA Cash Out Program can provide a homeowner with the financial means by which to pay off credit card balances or medical bills, make home improvements, fund a child’s college tuition bills, and more. Many homeowners even take advantage of an FHA Cash Out Program to start a business or make a wise investment.
More commonly known as a “Cash Out refinance,” an FHA Cash Out Program replaces a homeowner’s current mortgage with a new home loan that includes the original mortgage balance plus an additional amount of cash desired, plus any applicable costs.
As long as there’s adequate equity to cover the additional cash, a homeowner can refinance the existing loan for more and take home the rest in cash!
Similar to home equity lines of credit (HELOCs) and home equity loans, a Cash Out refinance is another way of leveraging the equity that’s built up in a home – as it may have increased in market value and as payments have whittled down the amount owed on the original mortgage.
Basically, it involves replacing the current mortgage by taking out a new one, possibly with different terms – and for an amount that’s larger than what the homeowner may currently owe.
Since equity is the difference between the current value of a property and the amount owed on the mortgage, the amount of money that can be borrowed depends on the amount of equity that's been built up in the home's value. To be eligible for an FHA Cash Out refinance, borrowers need at least 15 percent equity in the property based on a new appraisal.
A Cash Out refinance can be a smart option for homeowners who see this type of refinancing as an effective way to secure more favorable terms on their debt. Better yet, a Cash Out refinance can have a fixed interest rate, which also makes it a terrific opportunity to switch out a variable rate loan and have a fixed mortgage payment for the life of the loan.
It’s important for anyone to weigh the impact of their overall financial circumstances and goals before taking action, due diligence is always encouraged. However, an FHA Cash Out Program, such as a Cash Out refinance, can potentially help homeowners pursue their short- and long-term financial goals.
A New American Funding Loan Officer can clarify the benefits for this and other loan options. Contact us today. Also, check out out FHA loan requirements page to learn more information.
Check out our easy-to-use mortgage refinance calculator to help you decide whether refinancing could be a good option.