Yes, Defy Mortgage does offer cash-out refinancing options for homeowners looking to tap into the equity they've built up in their home for cash. Some of the cash-out refinance option offered at Defy Mortgage include but are not limited to, non-QM cash-out refinancing options such as bank statements, DSCR, and P&L and traditional home loan cash-out refinance options. 

A cash out refinance is a strategic financial refinancing option that allows homeowners to take out a new loan for an amount higher than their existing mortgage, with the difference provided as cash. How much cash you can get depends on your home equity. To break it down, this refinancing method involves replacing the existing mortgage with a new, larger loan, borrowing more than the current mortgage balance and receiving the difference between the new loan amount and the existing mortgage as a lump sum cash payment. By leveraging the equity built up in their home, owners can obtain needed cash while potentially improving their overall mortgage situation. Like home equity lines of credit (HELOCs) and home equity loans, cash out refinancing is limited by the equity you’ve built up in your home. Equity reflects how much of your home you own outright, versus what is still owed. 

A rate-and-term refinance is one mortgage refinancing option that focuses on changing the interest rate, loan term, or both, without changing the principal balance of the loan. Homeowners typically use this option to secure a lower interest rate, reduce monthly payments, or switch from an adjustable-rate mortgage to a fixed-rate mortgage, or vice versa. Compared to a cash-out refinance, a rate-and-term refinance doesn’t allow you to withdraw any equity from the home in cash. This makes it a solid choice for those who want to improve their loan terms without increasing their mortgage debt. This refinancing option can help you save significantly on mortgage payments over the life of the loan, depending on the new rate and term.

Yes. Most lenders require that you maintain at least 20% equity in your home after completing the cash-out refinance. Because a refinance with cash out gives borrowers a lump sum of cash that can be used freely, how much cash you can get depends on your home equity, and that varies. Usually, LTV for cash out refinance is somewhere between 70-75% depending on the lender, in keeping with the minimum equity requirement. However, at Defy Mortgage, we can go as high as up to 80% LTV for some cash-out programs depending on the criteria.

The choice between rate and term refinance and cash-out refinance depends on your financial goals. For example, it makes sense to choose a rate-and-term refinance if you want to lower your interest rate or change your loan term, while a cash-out refinance is better if you need access to cash.

If you are interested in speaking with a lender who specializes in Non-QM loan refinancing, hit us up and we can help you explore your options.

Benefits:

• Lower monthly payments: Refinancing to a lower interest rate can reduce your monthly mortgage payments, which can improve your cash flow and financial flexibility.
• Shorter loan terms: Refinancing to a shorter term allows you to pay off your mortgage faster and save on interest in the long run

Here are some scenarios where this type of refinance makes sense:

• Interest rates have dropped: If market interest rates have fallen since you first took out your mortgage, refinancing to a lower rate can reduce your monthly payments and save you thousands in interest over the life of the loan.
• Improved financial situation: If your credit score or financial stability has improved, you may qualify for better loan terms, such as a lower interest rate.
• Wanting to pay off the mortgage sooner: Homeowners who want to pay off their mortgage faster may choose a shorter loan term, such as switching from a 30-year to a 15-year mortgage, to become debt-free more quickly.
• Stabilize your mortgage: If you’re looking to switch from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage, a rate-and-term refinance can provide the stability of predictable monthly payments.
• Save on interest without reducing equity: Homeowners who want to save on interest but aren’t interested in tapping into their equity will benefit from a rate-and-term refinance. It provides more favorable terms without increasing overall debt or changing equity.

Benefits:

• Accessing cash immediately: A cash-out refinance allows you to access your home equity relatively quickly while keeping your interest low compared to other types of loans.

Here are some ideal scenarios where a cash-out refinance may be beneficial:

• Need for cash for significant expenses: Whether it’s home renovations or a large upcoming expense, a cash-out refinance allows you to convert a portion of your home’s equity into cash to cover a wide variety of expenses.
• Debt consolidation: If you have high-interest debt, such as credit cards or personal loans, a cash-out refinance can help you consolidate that debt into your mortgage at a lower interest rate to reduce overall payments.
• Leveraging equity for investment: Some homeowners use a cash-out refinance to access funds for new investment opportunities, such as purchasing rental properties or funding a new business venture.

Interest-rates change daily based on a variety of contributing factors. If you are interesting in getting a rate quote for a potential refinance, give us a ring at (615) 622-1032 and we will be happy to assist you.

Yes. LTVs do vary depending upon the loan program, lender requirements, borrower profile and more. Please be sure to reach out to your lender for exact LTVs for both rate-and-term and cash-out refinances.