Getting a cash out refinance mortgage means that you are
taking
equity out of your home other than the amount needed to cover
all the closing costs. Normally, up to one percent of the loan
amount is allowed for closing costs without being considered a cash out refinance.
Why would it make any difference if you refinance your
mortgage with cash out? The answer is that certain lenders
have specific restrictions
about receiving cash out within a designated time.
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 a cash out
refinance can be 6 months to 1 year, but some refinance
mortgages do not require any seasoning. Usually, this guideline applies if your mortgage will be 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.
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