Cash Out Refinance
Eligibility Requirements
Cash-out refinance transactions must meet the following requirements:
- The existing mortgages need to be paid off.
- Continuity of obligation must be demonstrated.
- Properties listed for sale in the 6 months preceding the application date for new financing are limited to 70% LTV/CLTV/HCLTV ratios (or less if mandated by specific product/occupancy/property type; i.e., 65% for manufactured homes). Note: Properties that were listed must have been taken off the market on or before the application date.
- You must have had your current mortgage at least six months.
The following transaction types are not eligible as cash-out refinances:
- The mortgage is subject to a temporary interest rate buydown.
- The subject property was purchased by the borrower within the 6 months preceding the application for new financing.
- The subject property is currently listed for sale.
- The existing mortgage is a “restructured mortgage.”
Acceptable Uses
- The following are acceptable uses for cash-out refinance transactions:
- Paying off the unpaid principal balance of the existing first mortgage.
- Financing the payment of closing costs, prepaid items, and points.
- Paying off any outstanding subordinate mortgage liens of any age.
- Taking equity out of the subject property that may be used for any purpose.
- Financing a short-term refinance mortgage loan that combines a first mortgage and a nonpurchase- money subordinate mortgage nonpurchase-money subordinate mortgage into a new first mortgage or a refinance of the short term refinance loan within 6 months
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