Cash Out and Debt Consolidation
Are you overwhelmed with debt? Most situations with high credit card balances, student loans, large mortgage payments, auto payments, and other debt obligations can be overcome by cashing out on your home. Your annual percentage rate (APR) on your home loan versus your credit card or other debt obligations are often a lot lower.
You can save a lot of money by paying off your credit cards or paying off debt obligations with the equity in your home.
Why Cash Out or a Debt Consolidation Loan
A cash out or debt consolidation loan is a solution for borrowers who are overwhelmed with high monthly payments. The additional funds can be used to:
- Make home improvements.
- Consolidate higher-interest debt.
- Other consumer wants or needs.
The three types of cash-out refinance loans are conventional, FHA, and VA.
Conventional Cash Out and Debt Consolidation
Depending on credit, capacity, and collateral, maximum cash out loan-to-values vary. The traditional route allows you to borrow:
- Up to 80% loan-to-value for primary residence.
- Up to 75% loan-to-value for investment.
There are also non-qualified mortgage options for investment properties:
- Higher loan-to-value options are available with a debt-service coverage loan.
- They do not require personal income.
FHA Cash Out and Debt Consolidation
An FHA loan is more lenient when it comes to credit and debt-to-income ratios, but stricter when it comes to property condition. An FHA mortgage allows you to cash out:
- Up to 80% loan-to-value.
VA Cash Out and Debt Consolidation
- With a VA cash out, most lenders maximum loan-to-value is 90%.
- It is possible to cash out up to 100% loan-to-value, but additional guidelines need to be met.
Cash Out Refinance Benefits
- Defer up to 2 mortgage payments.
- Overall lower monthly debt payments.
- FHA – Possible Refund on Initial FHA Insurance Premium and lower monthly insurance.
- One low monthly payment with no high balances with many different accounts.
- Refund on your current escrow balance.
Home values have skyrocketed. Use this advantage to eliminate mortgage insurance forever and knock out stressful bills with extra cash.
