- Lower Term
- Lower Rate
- Second Mortgage Programs
- Home Equity Line of Credit (HELOC)
Get Cash From Your Home!
Cash-out refinancing works by refinancing your mortgage for more than you currently owe. The extra funds can then be taken out and used for whatever you might need. Common uses include paying off debt, remodelling your home, or paying off college tuition.
- Consolidate your debt
- Make repairs to your home
- Lower your interest rate and pull equity out of your home
As per the Freddie Mac website:
- Loan Prospector
- Non-Loan Prospector
- Minimum Indicator Score of 620 unless otherwise specified in the Guide (Loan Prospector A-minus mortgages are exempt.)
- All mortgages must meet the risk class and/or minimum Indicator Score requirements in Guide Exhibit 25A, where applicable.
- The borrower must have been on the title to the subject property for at least six months prior to the note date of the cash-out refinance mortgage.
- Refer to Guide Section 24.2 for requirements on continuity of borrower ownership or obligation.
- The Seller must make the determination regarding borrower creditworthiness in accordance with the requirements of Guide Section 37.4(b)
- New appraisal and inspection report required.
- Special requirements apply for special purpose cash-out refinance mortgages. See Guide Section 24.7.
Consolidate Your Debt With a Second Mortgage Loan
A Second Mortgage Loan is a secured loan that is subordinate to your first mortgage against the same property. Second mortgages are commonly used to consolidate debt, create a home equity line of credit, or purchasing another home.
Why A 2nd Mortgage:
2nd Mortgage Benefits
- Home equity loans
- Able to get fixed rate
- Lower credit rating requirements
Second mortgages are secured by your home, so there is a risk of losing your home after lack of payments. There are also usually second mortgage fees, and higher interest rates.
Use Home Equity to Establish Credit
A Home Equity Line of Credit (HELOC) is a type of second mortgage that is actually a revolving credit line similar to that of a credit card. Because HELOCs are secured by your home, they commonly offer high credit limits, lower interest rates and the interest is tax deductible.
- Tax deductible
- One set amount available to you
- Determine how much you need and when you need it
- Must meet the required credit ratings
- Must meet the required debt-to-income ratio
- Must have equity in the subject property
How HELOC Works
Lenders set the HELOC limits and then award the loan. Afterwards, the loan enters the draw period.
- The draw period can be a span for 5 to 20 years depending upon which program they fit into
- The borrower will receive a check book and a special credit card that is used for withdraws
- When the money is taken out the borrower will receive a monthly bill and must make a minimum payment (sometime interest only)
- When no money has been taken out there will be no money owed
At the end of the draw period which is usually 10-20 years, it will enter in a stage of the loan called “repayment period.” This is when the borrower cannot withdraw from the loan any longer and will receive a fixed payment schedule for repayment.