If you are running low on funds, you may be considering getting a cash-out refinance in Dallas to receive additional financial support. And while it can seem like an ideal solution to acquire quick cash, you should work with mortgage companies in Texas to gain a better understanding of how the process works to determine if it is the best option for you.
At BrightPath, we will use our passion and five-star professionalism to help you find the mortgage solutions you need.
How Does a Cash-Out Refinance Work?
As reported by mortgage companies in Texas, a cash-out refinance allows you to take advantage of your home equity. By renegotiating for a loan that is worth more than what you owe on your current mortgage, you can take the difference between the two amounts in cash. This money can be used for many purposes including making home improvements to increase your property value, building emergency capital, paying off debt, protecting investments, and much more.
Why You Should Consider
There are several situations where a cash-out refinance could be advantageous for your circumstances according to mortgage companies in Texas.
- Lower your mortgage payments. If your mortgage payments are too high, a cash-out refinance can reduce your costs and potentially shorten the loan term.
- Make home improvements. Use the money from a cash-out refinance on renovations that will add value to your home, including updating the HVAC system or adding another bathroom.
- Invest in your future. Mortgage companies in Texas recommend using funds from a cash-out refinance for smart future investments like higher education.
How to Qualify for a Cash-Out Refinance in Dallas
If you are interested in getting a cash-out refinance in Dallas, you must meet the following qualifications.
- Debt-to-income ratio (DTI). Mortgage companies in Texas will review your debt-to-income ratio to determine if you can handle the debt you will be taking on with your new mortgage. This is calculated by the amount of money you make against how much money you spend. The lower your debt-to-income ratio, the more likely you are to be approved for a cash-out refinance.
- Credit score. You need a 620 minimum credit score to qualify for a cash-out refinance. However, in some instances, this can be adjusted based on the type of loan you are applying for and the amount of cash you would like to get back.
- Home equity. When you apply for your cash-out refinance with mortgage companies in Texas, they will seek an appraisal to evaluate your property value. As a result, you must have a minimum of twenty percent home equity to be considered a viable candidate.
- History of timely payments. To be eligible for a cash-out refinance, you must have made timely payments on your mortgage for a minimum of 12 months.
- Loan-to-value ratio (LTV). Mortgage companies in Texas will consider your loan-to-value ratio when you submit your application. This helps them determine how much risk they will take on with the new mortgage. These requirements differ based on property type. For your primary property, the LTV is eighty percent because that is the maximum amount of home equity that can be taken out in cash. For secondary homes or investment properties, the LTV lowers to seventy-five percent.
The Professionals at BrightPath Can Help You with a Cash-Out Refinance
If you are interested in getting a cash-out refinance, the professionals at BrightPath can assist you from consultation to closing. With their years of knowledge and experience, they will ensure your cash-out refinance supports your long-term goals.
Contact us today to schedule a consultation.
At BrightPath, our brilliant mortgage solutions will help you build the future of your dreams.