In the last few years, mortgage lending guidelines have begun to loosen as the broader economy is stronger now that the recession has past. Following refinance scenarios are eligible for financing…
Cash-out refinancing followed by cash-out refinancing just six months after. You heard that right you can do a cash-out refinance and then turn around and do another cash-out refinance just six months later.
Cash-out refinancing after a previous rate and term refinance six months ago. If you did a payment reduction loan on your mortgage six months ago and are now looking to pull money out you can now do a cash-out refinance on a loan that was just refinanced as a rate and term refinance just six months earlier.
You can also now do a rate and term refinance on a previous loan that was a cash out refinance previously, you were not able to do this under Fannie Mae or under Freddie Mac. A cash out refinance loan would typically cost you a slightly higher interest rate and slightly higher fees then you can turn six months later and do a rate reduction loan.
You need now only provide one year of income tax returns when being self-employed which is great if you have been in the same field for the most recent last five years. The big benefit is if you had one income year most recently that was strong, but the previous year for example was terrible, the lender can automatically throw out the bad year so long as your most recent year of income tax returns is enough income to qualify.
Some lenders will still allow you to do a conforming high balance loan on a jumbo mortgage loan product paying off a second mortgage as long as there was no drawer on that second mortgage in the last 12 months and call the loan rate and term. The benefit is it allows for a higher loan to value, a better interest rate and lower fees otherwise you are subject to a conforming loan under Fannie Mae and Freddie Mac which classify that scenario as cash out subjecting you to worse loan terms.
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Scott Sheldon is a local mortgage lender, with a decade of experience helping consumers purchase and refinance primary homes second homes and investment properties. Learn more at www.sonomacountymortgages.com.