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.