Cash-Out Refinance Mortgages: Poor Credit, High Loan-to-Value ( LTV)

Cash-out refinance mortgages are used to access cash from home equity for any number of purposes. However, home owners with poor credit are often precluded from getting these mortgages.

Most lenders advertise cash-our refinances with minimum credit scores of 640 FICO and maximum LTVs of 80%. These are traditional terms for conventional mortgage products.

But, there are better terms available.

The best are probably those of VA-guaranteed cash-out refinances. Veterans get these loans with credit scores down to 550 FICO and, unbelievably, LTVs to 100%! That means you can cash out all available equity in your house.

The next best are FHA-insured mortgages. These cash-out loans have LTVs to 85% and allow credit scores down to 580 FICO. ( They also allow a very lenient 48% debt-to-income ratio.)

Both VA and FHA programs require mortgage insurance or guaranty fees, but they are reasonable.

Some mortgage lenders that offer VA and FHA mortgages do not provide the above terms. For security, they choose to layer, or “add-on”, to the FHA or VA base requirements. So, be diligent when seeking your cash-out refinance lender.

( Note: All Credits Mortgage Inc. does not add on to the FHA or VA base requirements.)