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What Are FHA Cash-Out Loans?

What Are FHA Cash-Out Loans?

Could FHA cash-out loans be right for you? Pure Finance can help you find the best deal.

Your home is perhaps the largest purchase you will ever make in your life. Not only do you have the mortgage to pay off, but you also have countless home improvements and repairs to make over the years. Finding ways to finance your home improvements does not have to be difficult; with Pure Finance Group, you can find multiple options, including FHA cash-out loans.

About the FHA

The Federal Housing Administration was established by President Roosevelt in 1934 to encourage homeownership in the United States during the Great Depression. At the time, only 1 out of 10 families owned a home rather than rented one. The FHA became a part of the U.S. Department of Housing and Urban Development in 1965. Today, middle-to-lower income families can qualify for FHA loans for a mortgage and FHA cash-out loans.

What Are FHA Cash-Out Loans?

FHA cash-out loans, also known as FHA cash-out refinance loans, are one way to refinance your mortgage to borrow a sum of money for whatever purpose you want. A home might be worth more than what the homeowner currently owes. The homeowner with enough home equity can then take on a new, higher mortgage and get cash out on the difference between the old and new mortgages.

Who Can Qualify?

There is a list of qualifications that a homeowner must meet before he can take on an FHA cash-out loan. The criteria for taking on FHA cash-out loans is as follows:

  • The loan is for the homeowner’s primary residence
  • The homeowner has resided there for at least 12 months
  • All monthly mortgage payments have been paid on time
  • The homeowner has a minimum credit score of 500
  • The maximum loan-to-value (LTV) ratio is 80%, meaning the homeowner owes less than 80% of the current mortgage.

Is an FHA Cash-Out Loan Right for You?

FHA cash-out loans have their pros and cons which one should take careful note of before pursuing one. An FHA cash-out refinancing loan is best for someone who wants to borrow money fast against themselves. It requires taking on a higher mortgage, but it also offers immediate funds for home improvements and other large purchases.

Pure Finance Group Is Here to Help!

Thank you for your interest in Pure Finance Group. We’re so excited you’re here. For more information on how our lending services can help you with your home financing needs, give us a call (410-401-4957) or fill out the form on our contact page today. If you have a question about any lending services we provide including home improvement loans, we are here to help answer all your questions. Just give us a call (410-401-4957) or contact us today. To keep up-to-date with the latest financing tips and solutions, keep in touch with us on Facebook and LinkedIn!

This entry was posted on Thursday, May 12th, 2022 at 4:29 pm. Both comments and pings are currently closed.