Home Refinancing with Cash Out


How does a cash out refinance work? It can provide a lump sum cash payment after the existing mortgage is paid off, plus the amount needed to cover all the closing costs and pre-paid items.

Cash out home refinance guidelines are different than rate & term loans because lenders have specific restrictions about receiving cash out.

Refinance mortgage lenders often have a seasoning requirement, which can limit the cash out based on how long it has been since equity has been taken out of your home.

The typical seasoning requirement for cash out refinancing can be 6 months to 1 year, but some refinance mortgages do not require any seasoning.

Usually, this guideline applies if the home refinance is over 75% loan to value. Some lenders also add a premium to the rate, or the maximum loan may be reduced.

The cash out seasoning guideline is not limited only to a previous mortgage refinance. If you have taken out a home equity loan, second mortgage, or an equity line of credit, within the last 6 months to a year before refinancing, your new mortgage can also be considered a cash out refinance.