Cash Out Refinance Changes

HUD has reduced the maximum loan-to-value on cash-out refinance loans to 80%.  Previously, a homeowner could borrow up to 85% of the loan to value which would mean that they would be able to take more cash out of the equity in their home.

Previous 85% Loan-to-Value Limit

New 80% Loan-to-Value Limit

Property Value Example

$275,000

Property Value Example

$275,000

Current Loan

$175,000

Current Loan

$175,000

85% Loan to Value

$233,750

80% Loan to Value

$220,000

Closing Costs

$6,000

Closing Costs

$6,000

Cash to Borrower

$52,750

Cash to Borrower

$39,000
  The new 80% loan to value limit goes into effect on September 1, 2019.  If you make application to refinance your home by August 30, 2019, the 85% loan to value limits will still be in effect.  It is important that your loan officer generate a case number for your application that identifies the date. If you’re considering an FHA refinance, it would be wise to not wait until the end of August because the end of the month is naturally busy for mortgage lenders and with this deadline taking place, it will add to their work load. If you’d like a recommendation for a trusted mortgage professional, give me a call at (757) 288-0194.