Will I Be Able to Get Cash Back at Closing or Not?

This will depend on what type of loan you are taking and from whom you are taking it. If you are taking out a purchase loan, then you wouldn’t likely be able to take any cash out of the transaction.

There are, however, three types of refinance transactions that you could take cash from. One is a no cash-out refinance, also called a rate and term refinance. Another is a limited cash-out refinance. The last one is just called a traditional cash-out refinance transaction. A rate and term refinance is just as it sounds. You do it because you want to replace your existing mortgage with another because the terms are better.

You do it because you are getting a better interest rate, getting a lower payment, or possibly both. If you are able to pay your closing costs out of pocket, you can even keep your same loan amount. You can also choose to roll associated costs into the new mortgage, but then your loan amount would increase. A limited cash-out refinance allows you to get a limited amount of cash back. For FHA, the amount is $500, and for conventional loans, it’s up to $2,000.

How much money as a percentage of your home value you can take will vary by program. According to a 2019 HousingWire.com article, FHA, for the first time in a decade, has lowered the total amount you can borrow against your home, including cash you take. It is now 80% of the home’s value.

Conventional loans will go higher, depending on your credit scores. Please call me with your questions regarding purchase and cash-out loans, and I’d be happy to answer them.