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Your First House To A Second Home: How To Refinance A Mortgage

The Spire

#: Arizona mortgage refinance

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You can use equity from your current home to purchase a second home through cash-out refinancing. This is a viable option for homeowners who need a down payment to buy a second property. However, if your equity is large enough to cater to the entire cost of the second property, the better. Arizona mortgage refinance works well if you’ve got meaningful equity.

How to Buy a Second Home Using Cash-out Refinance

You can get a second property using the equity in your existing home. Most lenders will give you up to 80% of your primary residence equity. The best part about this is that you can easily get low-interest rates. There are certain requirements that lenders ask for to qualify for a refinance loan as follows:

a. Credit Score

The minimum credit score for qualifying for a cash-out refinance is 620. However, some programs, including the FHA loan program, accept as low as credit scores equivalent to 580.

b. Home Equity

The basic criteria for eligibility of Arizona mortgage refinance is to have at least 20% home equity.

c. Loan to Value Ratio

You should have a loan to value ratio that doesn’t exceed 80%. A lender won’t approve your loan without determining the LTV.

d. Debt to Income Ratio

Most Arizona mortgage lenders need a debt to income ratio below 50%.

e. Proof of Income or Employment

How Long do Cash-out Refinance Loans Take?

The duration a cash-out refinance loan takes varies from lender to lender and the kind of initial mortgage loan you had applied for. For instance, with FHA and VA mortgages, you’ll have to wait for approximately 6months before getting a cash-out refinance. Some like USDA refinance can go up to 12months.

What are the Refinance Rates?

Different lenders usually have different refinance rates and closing costs. One of the best and cheapest Arizona refinancing lenders is the spire credit union. The lender offers conforming mortgages for refinances. If you want to get a 15year fixed refi, you’ll get a rate of 3% and an APR of 3.019%. Their minimum and maximum loan limits are $15,000 and $822,000, respectively.

In conclusion, a cash-out refinance will help you acquire a second home with ease. You can also consider its alternatives, including HELOCs and bridge loans.

A Lending Hand for Financing Home Mortgages

Spire Financial (A Division of V.I.P. Mortgage, Inc.) brings lending expertise to you. All of our loan officers offer personalized communication for every client, guiding them through the process. We can show you ways to maximize your finances and unlock future opportunities. Spire Financial keeps you in control of refinancing, debt consolidation, and home equity. Together, we can achieve your financial goals.