Freddie Mac's cash-out refinance mortgage options can help borrowers leverage home equity for immediate cash flow.
Whether borrowers want to consolidate debt or obtain cash for home improvements (or reduce a rate and monthly payment; pay off a purchase money junior lien used for any purpose; or pay off a leasehold interest), all related closing costs, financing costs and prepaid items can be rolled into the new loan amount, further maximizing your borrower's cash flow potential.
In addition, our special purpose cash-out refinance mortgage allows borrowers in special circumstances to use the proceeds of the refinance transaction to buy out the equity of a co-owner.
Cash-out refinance mortgages help you meet the needs of more refinance borrowers looking to leverage their home equity for a variety of purposes, retain more of your customer base in refinance markets and meet the needs of borrowers with special circumstances using the special purpose cash-out refinance option.
Who is Cash-out Refinance for?
- Borrowers who want to consolidate other debt.
- People who want to leverage home equity for cash.
- Borrowers who want to roll up-front costs into their mortgage package.
The information on this page is not part of, and is not a replacement or substitute for, the requirements found in the Freddie Mac Single-Family Seller/Servicer Guide and your other Purchase Documents.
- Credit Fees
A Cash-Out Refinance Mortgages Indicator Score / Loan-to-Value (IS/LTV) credit fee in price applies. This credit fee is not billed for special purpose cash-out refinance mortgages delivered in accordance with the requirements of Guide Section 6302.14.
See Guide Exhibit 19 for details on this and all other applicable credit fees.
- Delivery Requirements
Refer to Guide Section 6302.16(b) for special delivery instructions for cash-out refinance mortgages.
- Down Payment or Closing Costs
All closing costs, financing costs and prepaids can be rolled into the new loan amount
- Loan Product Advisor
- Non-Loan Product Advisor
- Minimum Indicator Score of 620 unless otherwise specified in the Guide.
- All mortgages must meet the risk class and/or minimum Indicator Score requirements in Guide Exhibit 25A, where applicable.
- When paying off a first lien mortgage, at least 12 months must have passed between the note date of the mortgage being refinanced and the note date of the cash-out refinance mortgage. Refer to Section 4301.5 for exceptions to this requirement.
- The borrower must have been on the title to the subject property for at least six months prior to the note date of the cash-out refinance mortgage.
- Refer to Guide Section 4301.2 for requirements on continuity of borrower ownership or obligation.
- The Seller must make the determination regarding borrower creditworthiness in accordance with the requirements of Guide Section 5202.1(b)
- New appraisal and inspection report required.
- Special requirements apply for special purpose cash-out refinance mortgages. See Guide Section 4301.6.
- Eligible Mortgage Products
- 15-, 20-, and 30-year fixed-rate mortgages
- 5- and 7-year balloon/reset mortgages
- Most standard ARMs
- No seasoning requirement for eligible mortgages and inherited properties
- Super conforming mortgages. See Single-Family Seller/Servicer Guide (Guide) Chapter 4603 for requirements.
- Execution Options
- Servicing-released Cash*
- Servicing-retained Cash
- WAC ARM Cash
- Fixed-rate Guarantor
- WAC ARM Guarantor
- MultiLender Swap
- Maximum LTV Ratios
- Maximum LTV ratios must comply with Guide Section 4203.4 for Loan Product Advisor℠ and manually underwritten mortgages
- For TV/TLTV/HTLTV ratio requirements for super conforming mortgages, see Guide Chapter 4603.3
- Property Type/Eligible Properties
- 1- to 4-unit primary residences, including condos, PUDs and manufactured homes.
- Second homes
- 1- to 4-unit investment properties
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No Cash-out Refinance Mortgages
A no cash-out refinance mortgage can help customers consolidate higher-rate seconds into one, lower-rate loan with a no cash-out refinance mortgage.