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Cash-Out Refinance
I have a brand new $620,000 house that I built. I have a balance of 155,000 on my construction loan and I would like to get up another 25,000 for a total of 180,000.
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1 Reply
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Your loan-to-value ratio puts you in a strong and secure financial position.
Your Current Situation
- Estimated Home Value: $620,000
- Current Construction Loan Balance: $155,000
- Cash Needed: $25,000
- Requested New Loan Amount: $180,000
Loan-to-Value (LTV)
A $180,000 mortgage on a $620,000 home gives you a low loan-to-value ratio of 29%.
With this setup, you would have about:
- $440,000 in home value you own ($620,000 – $180,000)
- Approximately 71% equity
Most lenders require a higher loan-to-value ratio, so with a 29% ratio, your ownership in the home is very strong.
Potential Solutions
Cash-Out Refinance
If you replace your construction loan with a new mortgage, you could receive about $25,000 in cash after closing costs.
- Pay off the $155,000 construction loan.
Construction to Permanent Loan
If your lender offers a One-Time Close or Construction-to-Permanent Conversion, you may be able to include the extra funds in your final loan.
Home Equity Loan or HELOC
Another option is to:
- Refinance or change the $155,000 balance and
- Obtain a $25,000 HELOC or 2nd mortgage.
For most people, getting a $180,000 first mortgage with a 29% loan-to-value ratio is usually the simplest option.
Criteria for Mortgage Approval
Lenders usually consider factors like your credit score.
- The borrower’s average income
- The borrower’s work history
- The borrower’s debt compared to income
- How the home is used (main home, second home, or rental property)
- Whether the home has its final approval certificate
Relevant Information
Use the following information to check your mortgage eligibility and find the best options. Is this your primary residence?
- Which state is the home located in?
- Approximately what is your credit score?
- Are you working for someone else, self-employed, retired, or receiving disability income?
- Has your home received its final certificate? With a home valued at $620,000, requesting a $180,000 loan is a careful choice and should meet most mortgage program requirements.
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