The first calculator figures monthly home payments for 30-year loan terms. To help you see current market conditions and find a local lender current mortgage refinance rates are published in a table below the calculator. You can change the loan term or any of the other inputs and results will automatically calculate.
The calculator in the second tab allows you to estimate how much equity you can access at various loan-to-value limits. Most lenders typically allow homeowners to extract 80% to 85% of their home equity, with trusted clients or hot markets yielding higher limits.
Here is an easy-to-use calculator which shows different common LTV values for a given home valuation & amount owed on the home. Most banks typically limit customers to an LTV of 80% to 85% unless the loan is used for home improvements, in which case borrowers may be able to access up to 100%.
Below the calculator current mortgage refinance rates are displayed to help you lock-in today's low rates.
|Current first mortage balance|
|Current second mortage balance|
|Loan to Value||Cash Out Limit|
The following table highlights current refinancing rates in your local market. You can quickly adjust the loan amounts using the menu options. The above calculator tab offers a caulator to quickly figure common Loan-to-Value (LTV) amounts based on the value of your home & how much you owe on the existing loan.
The following table shows current 30-year mortgage rates available in . You can use the menus to select other loan durations, alter the loan amount, or change your location.
If you're a property owner with an existing mortgage, the equity you've built up over the years can often be turned to your financial advantage. Most of us are familiar with home equity loans (often referred to as a second mortgage), home equity lines of credit (HELOC), and reverse mortgages; all of which can grant homeowners access to some much needed funds. However, there is a further option that allows you to turn the equity in your home into ready cash. Cash that can then be used in any way that you see fit. If you have built up sufficient equity in your home, Cash-Out Refinancing may provide an opportunity to refinance your existing mortgage and receive a lump sum payout in the bargain.
Cash Out Refis Give You Access to Your Home Equity
After years of paying on a mortgage, and significantly reducing the principle, you will have built equity in your home. Any home price appreciation yields further valuable equity. That equity is the difference between the balance owed on your existing mortgage and the property's estimated market value.
With a cash-out refinance you tap into your earned equity by refinancing your current mortgage, and taking out a new loan for more than you still owe on the property. At closing, you receive a lump sum payout (the amount of the loan over and above what was still owed on your original mortgage) which can be used at your discretion to pay down consumer debt, perform some home improvements, or even invest in the stock market or another valuable piece of property.
So, for example, if your home is valued at $200,000 and you owe $100,000 on your mortgage, you have built up $100,000 of equity in the property. Now, let's suppose that you need/want $60,000 to pay off some high interest debts or to help your youngest out with college tuition costs. With a cash-out refinance you would remortgage your home for $160,000, and at closing you would receive a lump sum payout of $60,000. Unlike a second mortgage or a home equity line of credit, this is cash money in your hand, payable when your new mortgage is approved and finalized.
Initially the risk of COVID-19 was played down by the mainstream media until the epidemic was well underway. Then people stuck at home on lockdowns were fed alogorithmically-driven social news feeds pushing fear-driven stories making an already bad situation worse.
Reporting on COVID-19 Health Risks
Initial death rates for the disease were believe to be far higher than they actually were because many asymptomatic cases were not discovered. The head of the CDC stated coronavirus cases may be 10 times higher than reported. An observational seroprevalence study in Tokyo found that over half of workers at a particular company developed antibodies.
Some U.S. state governors poured fuel on the fire by forcing senior living fascilities to take in COVID-19 positive patients. People in senior care homes typically have comorbidities and are frequently incontinent, making it easy for the viral to spread through fecal shedding.
Hospitals were given financial incentives to label deaths as being caused by COVID-19. Those financial incentives along with loose reporting of 'died with' vs 'died of' has caused inflated death counts. In October the WHO estimated roughly 10% of the global population had been infected with the Sars-Cov-2 virus.
The COVID-19 epidemic impacted the United States far more adversely than it impacted China or most other countries. The virus and our repsonse to it ulitmately created a health crisis, an economic crisis, and a political crisis. Many instututions failed society.
Many lenders were required to allow homeowners to obtain forbearance. There are two key points which were part of the CARES act.
Foreclosures: Your lender or loan servicer may not foreclose on any federally-backed or GSE-backed loans until at least December 31, 2020.
Forbearance: Homeowners who experienced financial hardship due to the coronavirus pandemic have a right to request forbearance for up to 180 days. Homeowners can then request an extension of forbearance for another 180 days (for a total of up to 360 days).
According to Black Knight, 6.1 million American homeowners participated in COVID-19 related forbearance plans. By the end of August 2020 2.4 million homeowners (or 41% of the total forbearance program participants) had exited the program.
Some of the Federal laws like the CARES and HEROES acts not only doled out generous unemployment benefits but also prohibited evictions for a lack of rent payments. Some state and local governments also prohibited evictions for nonpayment of rent. While the large single family home REITs are trading near record highs, individual landlords who own a property or two faced serious cashflow struggles as renters who did not pay could not be evicted.
Initially the virus spread fastest in large cities and metro areas where people are densely populated. Lockdowns and political instability caused some people who lived in big cities to see limited upside in the high rents as their favorite venus remained closed, they were able to work from home, working from home in a cramped home proved frustrating, and saw months of violent protests and looting sweeping across the country
Social media news feeds shared many of the most extreme aspects which would have typically been hidden from the public. A crowd of BLM-antifa activists celebrating the cold blooded murder of Aaron Danielson who wore a Patriot Prayer hat in Portland.
Almost any loving parent who sees vidoes of arbitrary murders wants to go away from wherever that activity happens.
The political instability, economic instability, health scare, and violance have caused a rise in demand for suburban and rural single family homes while office rents in major cities fell. The stock prices of many homebuilders have increased sharply in response to the new wave of demand for consumers for single family homes.
Companies like Google and Facebook announced employees could work from home for the next year while some tech companies like Twitter announced remote arrangements would be indefinite. Some companies like REI gave up on their new headquarters and Pinterest paid to get out of their new San Francisco headquarters lease.
The virus later spread to rural areas with largely rural states like North Dakota evenually having the highest rates of infections per capita in early October, but by then many people had lockdown fatigue and the low fatality rate of the disease was widely known.
The FOMC market intervention along with a crash in the stock market & lowered inflation expectation has caused mortgage rates to reach historical record lows, which has caused real estate prices to hold up well and what will likely be a record year for mortgage originations. Black Knight's Ben Graboske stated: “Nearly $1.1 trillion in first lien mortgages were originated in Q2 2020, which is the largest quarterly origination volume we’ve seen since first reporting on the metric in January 2000.”
2020 a Record Year For Mortgage Lending
On September 15, 2020 Fannie Mae forcasted a record $3.87 trillion year for mortgage lending with $1.4 trillion in home sales and $2.4 trillion of loan volume being from refinancings.
Of course, as with any financial transaction, things are rarely as simple as they may seem on the surface, and there are a few key points that need to be considered. First, and foremost, is the amount of equity in your property. This will determine how much money you can access in a cash-out refinance, and while there are some generally accepted industry standards the ultimate loan-to-value limit will be set by your lender. Equally important are the rates and terms of your new mortgage. As attractive as cash-out mortgage refinancing may be, it can lead to trouble if your new loan comes with higher interest rates and an unusually restrictive repayment plan. It's also worth remembering that in most cases your new mortgage will be subject to the same vetting as any other loan, and the terms you are offered will be dependent upon your credit history, current employment, and overall financial profile.
If you are considering the possibilities of a cash-out refinance, there are a few important points to review:
Mortgage Seasoning Requirements
Most lenders will refuse to approve a cash-out refinance on any property with less than 12 months of seasoning. This is to prevent buyers from flipping and/or serially refinancing properties. Ideally, to qualify for a cash-out refinance at acceptable rates and terms, you should have at least 36 to 48 months of seasoning on your existing mortgage.
Maximum Loan-to-Value (LTV) Limits
Regardless of seasoning, there are strict limits on the amount of money you can receive in any cash-out refinance. Currently, the standard LTV is 85% of your mortgage equity. This is a general industry standard adopted by lenders following the housing crisis of 2008. It's worth noting that maximum LTV limits aren't written in stone, and are ultimately subject to the discretion of the individual lender. Some banks increase LTV limits when the loan is used for home improvement.
Income Tax Implications
The funds you receive via a cash-out refinance are not considered income, and so are not subject to taxation. In essence, you are merely taking out a new loan (which you will, of course, be required to repay with interest) so there will be no income tax to pay.
Tax Deductible Allowances
In certain circumstances, portions of the sum you receive from a cash-out refinance can be tax deductible. For example, you may deduct the interest on up to $750,000 in home purchase debt. If you were to take out a new mortgage on your home with a cash-out refinance and use the funds to pay down your outstanding consumer debt, interest on the portion of the debt which would be considered origination debt or interest on the portion which is used to substantially build or improve your home would be tax deductible. Interest on other portions of the debt would not be considered tax deductible. There are also tax deductions for points, which can be spread across the life of your loan to reduce your annual tax liabilities.
Naturally, there will be closing costs associated with a cash-out refinancing transaction. Typically, these are deducted from the amount you receive at closing, though in some circumstances lenders will fold any fees and charges into the principle of the new loan. Points are treated as an upfront interest payment. Interest on HELOC and home equity loans is no longer tax deductible.
Repaying the Debt
Finally, it is worth noting that by taking advantage of a cash-out refinance you are essentially extending the life of your mortgage. Moreover, you are doing so at new rates and with a new set of repayment conditions. Ideally, these should be an improvement over those associated with your current mortgage (although in some cases it can be beneficial to bump up the interest rates on your mortgage if you will be using the cash-out funds to pay down higher interest consumer debt). Still, it is important to understand that you are effectively taking out a new mortgage, and while you are receiving a cash payout in the bargain you are also taking on a new loan burden. Never forget that you are using your property as collateral, and you always run the risk of losing your home or landing yourself in a negative equity position where you owe more than they house is worth.
Homeowners holding an FHA backed mortgage can also benefit from cash-out refinancing, although the rules and regulations are slightly different from conventional refi programs. Overall, the guidelines governing FHA cash-out loans are somewhat more flexible, making them easier to obtain that a standard refi. That being said, there are some restrictions that FHA mortgage holders should be aware of if they are considering a cash-out refinance.
The USDA has similar limitations to the FHA. They have maximum loan amounts based on local property values & limit the availablity of funding to people who have moderate incomes, which is defined as the greater of 115% of the U.S median family income or 115% of the state-wide and state non-metro median family incomes or 115/80ths of the area low-income limit. These limits are based upon both the local market conditions and the family size.
The LTV limit on USDA refinancing is 80%.
Homeowners with an existing VA mortgage can also qualify for cash-out refinancing. However, like FHA refinance programs, lenders handling VA loans have slightly different guidelines when compared to conventional mortgage underwriters. The most significant difference is that homeowners holding a VA guaranteed mortgage are technically eligible to borrow against 100% of their property's equity on the initial mortgage & Ginnie Mae lowered the LTV limit to 90% on refinances. The VA will only guarantee 25% of the refi amount, and most lenders cap the loan-to-value limits on cash-out refinancing at 90%.
Otherwise, the requirements for VA cash-out refinancing are not dissimilar to those governing the FHA's program. Applicants will have to provide proof of income and assets, and the lender will run a full credit history. The property being considered must be owner-occupied, and there is a mandatory appraisal to determine current market value. Mortgage insurance is not required (though it is encouraged) as the VA guarantees a portion of the new loan. Finally, closing costs (including fees, taxes, and surcharges) will be deducted from the cash-out amount upon closing, and can not be folded into the loan's principle.
So far we have concentrated primarily on owner-occupied homes, but cash-out refinancing is also an option for rental and investment properties – though, admittedly, it can sometimes be difficult to obtain. Following the housing crisis of 2008, and the ensuing economic downturn, lenders were particularly hesitant to refinance investment properties let alone with a cash-out option. Fortunately, that is beginning to change, and cash-out refinancing for rental and investment properties is once again a viable option for consumers with sufficient equity in their holdings.
As with a conventional cash-out refi everything depends upon the equity you have built up in your property. The greater the equity, the more likely you are to qualify for refinancing and the more you will be able to benefit from the transaction. As a general rule, the loan-to-value limits on non-owner occupied properties is capped at 75%. On rare occasions, some lenders may extend the limit to 80%, depending on the property's equity and the owner's financial profile, but these loans are typically beset with higher interest rates and more restrictive terms.
While rental and investment cash-out loans follow most of the guidelines set for conventional refinance programs, there are some specific rules that only apply to the refinancing of non-owner occupied properties.
The loan-to-value limits for non-owner occupied properties vary depending on the nature of the property itself. The maximum LTV is 75% for single unit properties and 70% for 2 – 4 unit properties. If the property in question has been listed for sale within the last six months the LTV limit will be capped at 70%.
To qualify for refinancing, the property in question must not be listed for sale at the time of application.
Investment properties are not eligible for cash-out refinancing if they have been purchased within the last six months. Exceptions to this rule will be made if the property under review meets the Delayed Financing Guidelines set out by Fannie Mae.
Properly leveraged, refinancing rental and other non-owner occupied properties can be a way to reap greater financial benefits from your investments. However, there is always some risk, particularly if property values take a dive. Cash-out refinancing for non-owner occupied properties can be difficult to obtain, and you should expect to undergo a vetting process that is much more rigorous than would be applied to an owner-occupied or no cash-out refi. To qualify for a cash-out loan on any investment property you will need to show proof of an exceptional credit history, and should be prepared for a full review of all of your income, assets, and outstanding debts.
If you find you need to access a fairly large sum of money in a hurry, cash-out refinancing may be the answer. Certainly, it offers some advantages over other forms of debt. Still, while the benefits may be clear, there are some very real disadvantages that all property owners should be aware of before they decide to pursue a cash-out loan.
The primary reason anyone considers a cash-out refinance is to raise cash relatively quickly. Whether it is for pleasure or investment, a cash-out refi provides an opportunity to access some much needed cash at interest rates that may be more forgiving than a personal loan, credit card advance, or even a home equity line of credit. Of course, there are some alternatives to cash-out refinancing that allow consumers to raise some much needed cash without putting their homes or investment properties at risk. We would be remiss if we didn't spend at least a little time talking about those alternatives, and how they compare to cash-out refinancing.
The equity you have built up in your home or investment property is a very real asset that can be tapped to provide access to ready cash when you need it. However, like any financial venture, borrowing against that equity comes with certain risks, chief among them a long term mortgage and the possible forfeiture of your collateral (ie your home). While cash-out refinancing does offer quick access to cash, it is important to weigh all of the pros and cons before opting for a new loan. Consider the total cost of the loan (fees, surcharges, and interest payments) and the potential long term effects it may have on your overall financial profile. Fully investigate all other avenues that may allow you to access ready cash that may offer a greater return with less risk. If you decide that cash-out refinancing is right for you, treat the process as you would any other major loan transaction and take the time to find the best deal at the best possible rates and terms.
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