Cash-out refinance is another good reason to do a refinance. With a cash-out refinance you could….

• Pay off credit cards. These debts carry a much higher interest rate than a home mortgage. Paying off credit cards with a refinance could save you hundreds of dollars each month.
• Pay off high-payment vehicle loans
• Pay for college/trade school tuition
• Add a deck or a front porch, maybe a fence
• Upgrade a bathroom
• Convert a garage to living space

These loans would be classified as Conforming loans, and will follow the Conforming underwriting guidelines. Loans are for 15, 20 or 30 year amortizations

Sufficient equity in your home is required to support this type of loan.

A Renovation loan, if small enough in structure and amount, could possibly be done via a cash-out refinance.  If a large ‘addition’, (i.e. extra square footage is being added) is being done to the house that would require considerable time and money, then it would be classified as a construction loan. Learn more about construction loans here.

Maybe a Home Equity Line of Credit (HELOC) is the product you need.  This loan allows you to borrow against the equity in your home, similar to a credit card.  It offers a revolving line of credit meaning you can borrow, spend, and repay and borrow again.  You only pay interest on the amount you actually borrow, although you have the option of paying principle too.

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Characteristics of the HELOC:

• Minimum FICO 680
• Maximum Combined Loan-to-Value (CLTV) 85%
• Maximum DTI 50%
• $25,000 minimum loan amount
• Maximum loan amount $500,000
• 3- and 5-year draw periods
• 20- and 30-year amortization period