Cash-Out Refinance Seasoning Guidelines on Home Loans

This guide covers cash-out refinance waiting period guidelines on government and conventional loans. Cash-out refinance seasoning requirements differs on the particular loan program. There are various mandatory cash-out refinance waiting period and seasoning requirements depending on the individual loan program. For example, cash-out refinance seasoning on FHA and VA streamline refinance is a 6 month waiting period after the borrower closed on the FHA and VA loan.

For an FHA cash-out refinance seasoning requirements, it is a one year waiting period from the closing of the original FHA loan. Fannie Mae and Freddie Mac require cash-out refinance seasoning requirements for six months for both cash-out refinance seasoning and rate and term. In this blog, we will discuss cash-out refinance seasoning requirements on the various loan programs at GCA Forums Mortgage Group. Homebuyers purchasing owner-occupant home cash will need a minimum of six months before they are able to do a cash-out refinance mortgage.

Fannie Mae Cash-Out Refinance Seasoning Requirements

Fannie Maecash-out refinance seasoning guidelines require that the home buyer has closed the property for at least six months and have made six consecutive on-time payments. Fannie Mae Cash-Out Refinance Seasoning Guidelines are the same as a rate and term versus cash-out refinance mortgage. The waiting period for both types of conventional refinance mortgage program are both six months. This exception to the rule is made under the following circumstances:

• If the subject home was a home that was inherited and/or legally obtained by inheritance, divorce, legal separation, through the separation of domestic partnership, and/or other legal means
• If acquired by the above means of action, proper documentation is required

The property could have been owned prior to closing by an inter vivos revocable trust. Click Here To apply For Fannie Mae Cash-out Refinance

Freddie Mac Cash-Out Refinance Seasoning Guidelines

Freddie Mac’s cash-out refinance seasoning policy has similar cash-out waiting period requirements to Fannie Mae on conventional loans. There is a six month waiting period to refinance a rate and term or cash-out conventional loan. Maximum loan to value on conventional loans is 80% on cash-out refinances. On rate and term refinances, private mortgage insurance (PMI) is required on any loan to value that is higher than 80% LTV on conventional loans.

HUD Cash-Out Refinance Seasoning Guidelines

HUD, the parent of FHA, will allow FHA streamlines and/or FHA rate and term refinance mortgages after the borrower has closed on the subject property six months prior to and/or have made six monthly timely payments on their FHA loan. Cash-out refinance requirements mandate a one-year waiting period after the initial closing and that the borrower has made 12 monthly on-time payments. HUD allows up to 85% Loan-To-Value on all cash-out refinances.

Cash-Out Refinance Guidelines

GCA Forums Mortgage Group offers non-qm and alternative financing programs where there is no waiting period to do a cash-out refinance on investment property loans. Rates are higher than government and/or conventional loans. Mortgage rates are determined by the borrower’s credit scores and the down payment. The less risk the lender has, the lower the interest rates. We also offer bank statement loan programs for self-employed borrowers and asset depletion mortgages for real estate investors. Investment properties can close under a Limited Limited Partnership (LLC) which is ideal if you need to do an IRS 1031 Tax-Free Exchange.

Starting The Cash-Out Refinancing Process

GCA Forums Mortgage Group is a full-service mortgage lender licensed in multiple states without any LENDER OVERLAYS. As interest rates drop, many Americans are seizing this opportunity to get their financial picture back in focus. In this blog, we will detail what cash-out refinancing means and how to start your cash-out refinance. The rules for cash-out refinancing are ever-changing and a big rule change was just announced for FHA mortgages.

Cash-Out Refinancing Mortgage Process

What does cash-out refinancing mean?

A refinance transaction where you take equity out of your property in the form of cash. This cash can be taken out in a few different forms. Some families have a free and clear house, and some families pay off their current mortgage and take additional cash out. Either way, the refinance transaction results in a higher loan amount than previously on the property. This allows you to use the equity in your walls without selling the property. Click Here To Start Your Mortgage Process Today

What Are The Cash-Out Refinance Requirements?

The qualifications will be different for each mortgage product. Conventional, FHA, and VA mortgages all have different requirements.

Minimum credit score required on cash-out refinancing per loan program:

• FHA -500
• Conventional – 620
• VA – No minimum credit score

USDA does not allow for cash-out refinancing.

Loan-to-value requirements required on cash-out refinancing mortgages:

• HUD – as of September 1st, 2019 – 80% Max LTV on FHA cash-out refinance mortgage loans
• Fannie Mae and Freddie Mac: Conventional loans allow an 80% Max LTV on cash-out refinance mortgage loans
• VA – 100% MAX LTV (including VA funding fee) on VA cash-out mortgages

What Items Are Needed To Start The Cash-Out Refinancing Mortgage Process?

• Driver’s License
• Last 30 Days of Pay Stubs
• Last Two Years Tax Returns – (not always needed)
• Last Two Years W2 or 1099s
• Current Mortgage Statement
• Homeowners Insurance Policy

What Are The Closing Costs On Cash-Out Refinancing Mortgage Loans

With any mortgage transaction, there will be closing costs involved. The good news with refinance transactions as these costs is not out of pocket. With a purchase transaction, the closing cause may not be wrapped into the loan. that is not true for refinancing. The only out-of-pocket expense prior to closing is the cost of an appraisal. The appraisal fee will vary depending on your state and loan product. All of the LOAN FEES will be disclosed to you on a Loan Estimate. Fees included in Cash-out refinance transactions include lender origination, title work, local fees and taxes, and in some cases ESCROWS. Title fees are much lower for refinancing your home versus purchasing be home. Please call Alex Carlucci on (800) 900-8569 for more information on costs associated with a refinance.

Refinancing after Bankruptcy and Housing Event

Government and Conventional loans have a mandatory waiting period for a homeowner to do a refinance mortgage. FHA and VA require a two year waiting period after Chapter 7 Bankruptcy discharge date. Borrowers can do both a rate and term and/or cash-out refinance mortgage during a Chapter 13 repayment plan with trustee approval. There is no waiting period to qualify for VA and FHA loans after a Chapter 13 Bankruptcy discharge with both a purchase, refinance, and cash-out refinance mortgage. There is a three-year waiting period to qualify for a USDA loan after a Chapter 7 Bankruptcy discharge date.

There is a two year waiting period after foreclosure, deed in lieu of foreclosure, short sale on VA loans. There is a three-year waiting period to qualify for FHA and USDA loans after a foreclosure, deed-in-lieu of foreclosure, short sale.

Fannie Mae and Freddie Mac require a 4 year waiting period after a Chapter 7 Bankruptcy discharge date. The waiting period is 2 years after Chapter 13 discharged date on conventional loans. The waiting period is four years after Chapter 13 dismissal date on conventional loans. There is a seven-year waiting period on conventional loans after a regular foreclosure. NON-QM Loans have no waiting period after bankruptcy, foreclosure, deed in lieu of foreclosure, short sale. There is no waiting period on non-qm loans after a homebuyer purchases home cash and want to do a cash-out refinance mortgage. For more information about this topic and/or other mortgage related questions, please contact us at GCA Forums Mortgage Group at 800-900-8569 or text us for faster response. Or email us at gcho@gustancho.com. We are available 7 days a week, evenings, weekends, and holidays. Click Here To Start Your Cash-Out Refinaceing Mortgage

Here’s an extensive FAQ regarding cash-out refinance seasoning of home loans:

FAQ: Cash-Out Refinance Seasoning Guidelines

What Is a Cash-Out Refinance?

A cash-out refinance allows a homeowner to replace their existing mortgage with a larger loan, which can be used for several purposes, such as debt consolidation and home improvements.

What Are Seasoning Guidelines?

Guidelines on seasoning refer to the time limit placed on a borrower who wishes to do a cash-out refinance. That period starts from the date he or she acquired a loan. The periods differ according to the type of loan and lender.

How Long Do I Need To Wait To Do a Cash-Out Refinance?

• Conventional Loans: Most lenders will set a minimum period for seasoning, usually between 6 and 12 months, from when the borrower bought or refinanced a property.
• FHA Loans: This type of cash-out loan is subjected to an average of 12 to 12-month seasoning requirements.
• VA Loans: For cash-out refinancing, 6 months must be allowed to elapse before a borrower can refinance.
• USDA Loans: For FHA, USDA loans lack seasoning if securitized in the primary market. However, most USDA loan evaluations or originations do have 12 months of seasoning.

Why Are These Seasoning Requirements Necessary?

According to the information above, the seasoning requirements assist lenders in determining the borrower’s particular financial viability and property collateral risk, reducing the chances of default and ascertaining that the property’s value has not depreciated since the first loan was accrued or advanced.

Do The Seasoning Guidelines Have Exceptions?

There are other instances that some lenders make exceptions due to instances like:

• Rate and Term Refinances: The seasoning requirements for refinancing without cash out may be relaxed.
• Certain Hardship Cases: Lenders have been known to relax a few guidelines in cases of a medical or natural disaster or circumstances beyond the borrower’s control.

What Paperwork Do I Need For a Cash-Out Refinance?

To be able to carry out refinancing with cash-out, you may be required to present the following:

Income documents (pay stubs, tax returns, pay slips), Mortgage statements, Documents showing how much the property is worth (an appraisal), and an Explanation of how you intend to use the cash-out money.

Can I Get Several Cash-Out Loans To Reconsolidate My Home Loan?

No, a homeowner can reconsolidate their loan more than once; however, all cash-out knits must be followed. Each time the homeowner consolidates, the property’s worth and the homeowner’s financial condition after the consolidation must also be examined.

How Do You Manage Cash-Out Refinancing When Dealing With Equity?

The cash-out amount depends on your ownership equity when you use the home as collateral. Most lenders allow you to borrow up to 80% of the home’s appraised value, less any primary mortgage loan on that home.

Please highlight the expenses that a borrower incurs while refinancing via Cash-Out.

These costs may encompass cash-out refinancing, loan origination costs, appraisal boosters, etc, which include:

Closing costs, which normally range between 2% to 5% of the loan amount:

• Appraisal fees
• Title insurance
• Origination fees

What Are The Benefits of Cash-Out Refinancing?

Cash is accessible for various purposes, including home addition, debt consolidation, etc. Lower interest rates could be charged instead of borrowing from other sources. Mortgages could give a tax break on interest payments. Still, advice on forms should be directed to a tax form consultant.

Housing is a crucial social service that should be considered in the scope of disorder. Unfortunately, not everyone is able to afford housing. Having said that, information about the seasoning guidelines is targeted towards people who have a relative about to be upwards of twelve months with this employment.

Click Here To Start Your Cash-out Refinance Mortgage Process Today