Maryland Refinance Mortgage Rate Quote

Maryland Purchase Mortgage Rate Quote

A cash out mortgage refinance allows borrows to
extract cash from the available equity within their home.

Cash out refinances can be used to extract the available equity
in the home and additionally adjust the mortgage rate and term.
The amount of cash that is extractable depends on the property’s
current market value and the amount of existing liens on the property.

The cash out is available in FHA,VA and conventional loan types.

The cash out refinance rules change
depending on the loan type selected.
We have broken done some of the
loan types below:

Rules for Conventional Cash Out

The standard rule for a conventional cash out refinances is usually an
80% LTV (Loan-to-Value). The loan to value is the amount borrowed
that cannot exceed 80% of the current property value. Usually the
loan guidelines require that there be a minimum of 680 credit score.
In addition, this must be on a primary residence that is single family.
For condos, the max LTV on 2 - 4 units in usually set at 75%.
For manufactured homes, the max LTV for cash out refinance is
usually set at 65%.

FHA Cash Out

VA Cash Out

Conventional Cash Out

For a conventional cash out refinance on a second home the max LTV is regularly set at
75%, additionally the borrower should have a 680 or higher credit score.

For a conventional cash out refinance on an investment property the max LTV on a single
unit is regularly set at 75%, on 2 - 4 units the LTV is usually reduced to 70%. A credit score
of 680 or higher is usually required.

As can be seen, the keys to cash out refinances are LTV's and credit scores. It is important to
know that not all states allow for certain loan types, such as ARM’s and Balloons to be used in
cash outs. Each state law may, so may the guidelines. It is important to discuss
your specific needs with a loan officer.

Typically, the maximum LTV that can be loaned on a FHA cash out refinance is 85%. There is
Usually MI attached to the loan. MI is Mortgage Insurance. This is insurance that the borrower
pays in the mortgage payment and it insures the lender from loses in the event of a foreclosure.
The MI is usually NOT charge when the FHA refinance is a 15 year term. Once again, great credit
is required but usually the guidelines are less than that of conventional mortgages.

Typically, the maximum LTV that can be loaned on a VA cash out refinance is 90%. There is an
up-front funding fee charged. The fee is usually .5% of the loan and can be included in the loan
amount. It is possible to have this fee waived if the Veteran has a disability approved by the
VA. In that case, the fee is waived. Credit scores should be in the A category.

Not all cash out refinances allow for subordinate financing. This basically means,
Second mortgages or home equity lines/loans will be paid off within the refinance.

Also, the better the credit, the more stable the income, the lower the LTV the better
the chances are of the cash out being approved. As credit scores decrease so does
the maximum loan amount allowable.

The easiest way to understand a Cash Out Refinance is to understand the Math.

It is simple: The cash out refinance equation:

So lets put that equation to use.

If you current Maryland home is worth $200,000 and you owe $120,000
Then,  $200,000 - $120,000 = $80,000 is equity. You have available $80,000 in equity.
But you usually cannot take all of this cash.

Now you have to look at what the loan guidelines say. For a standard conventional
Maryland cash out you can usually borrower 80% of the homes value.
So the math is 80% X $200,000 = $160,000
So the max loan is $160,000.
Now subtract the current loan amount from the max new loan amount
$160,000 - $120,000 = $40,000 available to cash out.

So here is how the new loan breaks down.

The new loan amount is $160,000
$120,000 of that loan pays off the old mortgage
$40,000 is the “cash out” amount.

Just remember that from that cash out most borrowers usually pay the closing cost.
That may run several thousand with escrows included. So the funds received in the end
may be less than $40,000

 
The first item that the cash out refinance will payoff will be the current Maryland mortgages,
usually the new loan will require all mortgages be closed. Second mortgages and equity
loans/lines are paid off or subordinated. When subordinating the max LTV is usually reduced or
a max CLTV is stated in the requirements.
After the loans are paid off the cash may be used to pay off debt, make home improvements,
pay for college, get a car or even plain old cash in hand.
When paying of debts to qualify for the loan the lender usually requires 'pay off statements' prior
to closing and may require 'pay off satisfied statements' at post closing.
Sometimes you may even save money by doing a cash out refinance, When paying off debts
the total monthly payments you make may go down after they are all consolidated in the
new loan. So, although you may be getting a greater loan amount in your new cash out
refinance the term may be extended or the rate lowered and the mortgage payment may go
down. Also the cash out refinance may place debts that where previously non - deductible into
a tax deductible situation, this may save you money and increase income.

 A CLTV is a combined loan - to - value = If the first loan equals 80% of the homes value and
the equity line is 15% of the home’s value the CLTV is 80% + 15% = 95% CLTV.

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