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Cash-Out Refinancing in the Carolinas

Do you need cash for college tuition? Or maybe some money to fix your leaky roof? If so, a cash-out refinance might be for you. Unlike a traditional refinance4, which typically just changes the interest rate or term length of your mortgage, a cash-out refinance grants you a larger loan. With this loan, you pay off your original mortgage and then pocket the difference. Pretty sweet, right?

But not all homeowners in North Carolina and South Carolina qualify for a cash-out refinance. And even if you do quality, not all homeowners should pursue this refinancing option. At Dash Home Loans, we can help you determine if a cash-out refinance in North Carolina or South Carolina is right for you.

Plus, when you work with Dash, you receive five-star service from real people – not automated customer service lines. You also benefit from a streamlined refinancing process that is faster and simpler than what our competitors offer.

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What Is a Cash-Out Refinance?

In a cash-out refinance, North Carolina and South Carolina homeowners get a new, larger loan to pay off their existing mortgage. The difference is paid to the homeowner at closing. This money can be used for anything, though most people use it to consolidate higher-interest debts, pay for college, or make home improvements.

To be eligible for a cash-out refinance, you must have equity in your home. Lenders gauge equity using a metric called the loan-to-value ratio (LTV), which is calculated by dividing your current mortgage balance by the appraised value of your home. 

For example, if your mortgage balance is $50,000 and your home is worth $200,000, your LTV is 25%. With the exception of VA lenders, most financial institutions require an LTV of 80% or less.

NC & SC Cash-Out Refinance Interest Rates

Interest rates for a cash-out refinance vary depending on the respective lender and the borrower’s credit score. However, borrowers can expect to pay a higher interest rate on a cash-out refinance than a traditional refinance because lenders perceive these loans as riskier.

Why? Because you get a larger loan with a cash-out refinance. Since you’re borrowing more money, the risk of default is higher. To compensate for that, lenders increase the interest rate. This doesn’t mean that you can’t secure a lower interest rate with a cash-out refinance. But it does mean that homeowners with ultra-low rates on their original loan should weigh the decision to refinance very carefully.

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Not sure if you qualify? Contact us today to talk with one of our friendly Mortgage Coaches.

Eligibility for Cash-Out Refinancing
in the Carolinas

Whether or not you qualify for cash-out refinancing in the Carolinas depends on the lender and loan type. But generally, North Carolina and South Carolina cash-out refinancing requirements include:

  • More than 20% equity in your home, meaning you have a loan-to-value ratio of 80% or less. If you’re refinancing a VA loan5, lenders may allow you to cash out 100% of your home’s equity.
  • A new appraisal to verify your home’s value. This helps lenders calculate the amount of equity you have in your home.
  • A credit score of at least 620, at least for conventional loans. FHA loans typically have more lenient credit requirements of 600 or higher.
  • A debt-to-income ratio of 43% or less. This metric is calculated by dividing your monthly debt expenses by your pre-tax income.

Your mortgage lender can provide more information regarding the specific requirements for your cash-out refinance.

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Types of Cash-Out Refinance Loans
in the Carolinas

There are many different cash-out refinancing options, each with its own merits. Explore the cash-out refinancing loans we offer, then reach out to be matched with a Mortgage Coach in North Carolina or South Carolina. 

Your Mortgage Coach is like a trail guide. They’ll be there with you every mile of the journey, helping you climb mountains and ford the icy rivers of refinancing. Oh, and they’ll also help you find the perfect cash-out refinance loan. 

  • FHA Cash-Out: Designed for homeowners with less-than-perfect credit scores. 
  • VA Cash-Out: Allows eligible veterans to cash out 100% of their home’s equity. 
  • Conventional Cash-Out: Best for homeowners with at least 20% equity. 
  • Jumbo Cash-Out: Designed for home loans that don’t meet standards set by the Federal Housing Finance Agency.

Benefits & Disadvantages of a Cash-Out Refinance

There are some very obvious benefits to a cash-out refinance. Chiefly, a cash-out refinance lets homeowners unlock the cash they need. This money can then be used to consolidate higher-interest debts or to make home improvements. A cash-out refinance may also help you secure a lower interest rate, even though your principal is larger.

Of course, cash-out refinancing is risky because you may not be able to afford higher monthly mortgage payments. North Carolina and South Carolina homeowners should also consider the costs and time associated with closing. Much like closing on a new home loan3, you will be expected to pay 2% to 6% of the total loan amount. Plus, closing will take 30 to 60 days, which isn’t ideal if you need money fast.

Ready to get started? Contact us online or give our refinancing experts a call at 704-912-0020 to begin the process!

Cash-Out Refinance vs. Home Equity Loan: Which Is Right for You?

Both a cash-out refinance and a home equity loan allow you to tap into your home’s equity. But the two refinancing tools work very differently. In cash-out refinancing, you replace your existing mortgage with a higher loan amount. This, in return, leaves you with just one loan. But with a home equity loan, you take out a secondary loan and use your equity as collateral.

Neither lending option allows you to take 100% equity from your home (except in the case of VA cash-out refinancing). Nor do these lending options have spending restrictions. That means you can use the money for anything – medical bills, student loans, renovations, or large purchases.

Which option is best for you depends on your financial circumstances. While cash-out refinance loans typically have lower interest rates, they do have higher closing costs. However, a homeowner may opt for a home equity loan if they don’t want to alter their existing mortgage, either because they have a low interest rate or because they’re close to paying off the principal.

Still unsure which option is the right fit? Give us a call at 704-912-0020 to get in touch with a Mortgage Coach.

The Dash Cash-Out Refinancing Process

At Dash, we don’t like to beat around the bush. So, we’ll just say it: Refinancing sucks. That’s because the average mortgage refinance lender in North Carolina and South Carolina makes refinancing a long, winding process with lots of paperwork and confusion. Loan officers say they’re available to answer your questions and provide guidance, only to ghost when you give them a ring. 

Dash Home Loans does better by being better. We offer homeowners a refinancing process that is – dare we say – enjoyable? To reduce the number of times you have to sign on the dotted line, we’ve fired external loan processors and kept everything in-house. This means you’ll get approved for your cash-out refinance loan faster and with less frustration.

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Work with a trained Mortgage Coach like Crystal.

Work With Dash Home Loans for a Cash-Out Refinance in the Carolinas

Does talk of cash-out refinancing get you flustered? Get zen instead. When you apply for a cash-out refinance in North Carolina or South Carolina with Dash Home Loans, our expert team walks you through the process step-by-step. We’ll begin by discussing the advantages and disadvantages of a cash-out refinance, looking at your financial circumstances to see if this tool is right for you. 

If you could benefit from debt consolidation or some extra cash, our Mortgage Coaches will then discuss the different cash-out refinance loans we offer. If you’re an eligible veteran, for instance, a VA loan5 is likely the best option for you. Or, if you have less-than-perfect credit and limited home equity, we might suggest an FHA loan. No matter your situation, we’ll find a lending option that suits your needs. 

Unlike big banks or credit unions, our Mortgage Coaches want to see you achieve your financial goals – whether that be paying off high-rate credit card debt or sending your child to college. That’s why we’ve edited our refinancing process, cutting out middlemen and unnecessary steps so that you get approved in a flash. Still skeptical? Read our reviews. 

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Helping Homeowners in the Carolinas

NC & SC Cash-Out Refinancing Made Easy

Still unsure if a cash-out refinance is right for you? Don’t worry! When you reach out to Dash Home Loans, we’ll connect you with a Mortgage Coach who can talk through this big decision.

Ready to get started? Great! Click “Apply now” below to begin your application.

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Frequently Asked Questions

NC & SC Cash-Out Refinancing FAQs

How does a cash-out refinance work?

A cash-out refinance lets you tap into your home’s equity by taking out a larger mortgage. This larger mortgage pays off your original loan, allowing you to pocket the difference. Though you can spend the money on anything you’d like, it’s generally advised that this cash be used for things like debt consolidation or home improvements.

Is a cash-out refinance worth it?

It depends. A cash-out refinance is worth it if you’re putting your home’s equity to good use. Since home loans typically offer better interest rates than student loans, a cash-out refinance might be a good choice if you need money for college. It could also be a good choice if you plan on consolidating high-rate debt. However, these benefits must be weighed against the risk of potentially defaulting on your home loan.

How much money can I cash out when I refinance?

It varies. Typically, lenders will limit a cash-out refinance loan to 80% of your home’s value. However, a VA loan⁵ allows eligible veterans to cash out 100% of their home’s equity.

Is a home appraisal required?

Yes, most lenders require a home appraisal. An appraisal helps lenders calculate the amount of equity you have in your home.