Cash Out Refi

FHA Cash Out Refinance

An FHA cash out mortgage provide homeowners the opportunity to access some of their home’s equity by refinancing their current principal balance and taking the rest in the form of cash or paying off liabilities through the loan closing.  The current FHA guidelines allow homeowners to borrow up to 85% of their home’s appraised value while the other 15% remains as equity in the home.

For many individuals this loan program works well as a debt consolidation mortgage when homeowners have various forms of consumer and personal liabilities.  Some homeowners realize that by paying of their home equity line of credit, they can consolidate the two mortgages into one fixed rate tax-deductible lien.

Another popular use of the FHA cash out refinance is for homeowners that are currently in a Chapter 13 bankruptcy repayment plan.  Borrowers in this situation can frequently stand to improve their situation substantially by paying off the balance of the debt determined by their trustee and simultaneously conclude their Chapter 13 bankruptcy.  In most cases, the new mortgage payment is considerably less than the combination of their previous mortgage and bankruptcy payment.