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Cash-Out Refinancing in the Tennessee

Are you working three jobs, trying desperately to pay off high-interest debt? Have you put off fixing your home’s leaky roof for months because you don’t have the money? If so, a cash-out refinance in Tennessee could save the day. 

Like a traditional refinance, a cash-out refinance is an opportunity to modify your interest rate and loan terms. But it’s also an opportunity to tap into your home’s equity. 

At Dash Home Loans, we partner with homeowners across the Volunteer State, helping them decide if a cash-out refinance is a savvy financial move. We also provide five-star customer service. Meaning, that real people will return your emails and phone calls. 

So, are you ready to consolidate debt, make home repairs, or accomplish whatever else is on your to-do list? Getting approved for a cash-out refinance in Tennessee is easy with Dash!

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What Is a Cash-Out Refinance?

A cash-out refinance is similar to a traditional refinance in that you can tweak your loan terms and change lenders. 

However, there’s an important difference: With a cash-out refinance, you secure a bigger mortgage. This mortgage pays off your existing mortgage. Then, at closing, you’re cut a check for the difference. 

This money can be used for anything – paying off student loans, putting a new roof on your house, or even bankrolling a trip to Jamaica. Pretty awesome, right?

Cash-Out Refinance Interest Rates

We know what you’re thinking: “A lump sum of cash? Let’s do this!” But before you sign on the dotted line, know that interest rates on cash-out refinance mortgages are typically higher. 

Why? Well, a cash-out refinance involves taking out a larger loan. With a bigger loan comes a bigger risk of default. To account for this risk, lenders jack up the APR. That being said, homeowners with superb interest rates should think long and hard about a cash-out refinance.


Am I Eligible for a Cash-Out Refinance in Tennessee? 

The main requirement for a cash-out refinance in Tennessee is equity. If your mortgage is underwater, this isn’t the refinancing option for you. 

To quantify equity, lenders use the loan-to-value ratio (LTV). This metric is calculated by dividing your current mortgage balance by the appraised value of your home. Most lenders require an LTV of 80% or less. 

Other requirements for a cash-out refinance in Tennessee include:

  • A new appraisal to verify your home’s value. This is needed so that lenders can calculate your LTV. 
  • A credit score of at least 620, at least for conventional loans. Since FHA loans are government-backed, they have more flexible credit requirements. 
  • A debt-to-income ratio of 43% or less. This is calculated by dividing your monthly debt expenses by your pre-tax income. 
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Not sure if you qualify? Contact us today to talk with one of our friendly Mortgage Coaches.

Types of Cash-Out Refinance Loans

Like barbecue sauce, cash-out refinance mortgages come in all types of flavors. Some are smoky, some are sweet, and some are downright hot. 

The right cash-out refinance loan for you depends on lots of different factors, from your creditworthiness to your LTV ratio. 

Not sure which mortgage is right for you? Peruse the loans offered by Dash and then reach out. We’ll connect you with a Mortgage Coach who can help you find a savory deal.   

  • FHA Cash-Out: Designed for borrowers with less-than-stellar credit scores
  • VA Cash-Out: Ideal for eligible veterans who want to pocket 100% of their equity. 
  • Conventional Cash-Out: Perfect for homeowners with at least 20% equity. 
  • Jumbo Cash-Out: Refinancing option for homes that don’t conform to lending limits set by the Federal Housing Finance Agency.  

Pros & Cons of a Cash-Out Refinance

A cash-out refinance can be a savvy choice for certain Tennessee homeowners. You can use the money to consolidate high-interest debt or pay for an expensive medical procedure.

The proceeds from a cash-out refinance can also be used to make home repairs, like adding a screened-in porch or upgrading the plumbing. This can increase the resale value of your home. 

Of course, there’s a downside. (Isn’t there always?) A cash-out refinance will mean larger monthly mortgage payments and, in most cases, a higher APR. If you can’t afford these changes, you risk defaulting. 

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

There are two tools that let homeowners capitalize on their home equity: a cash-out refinance and a home equity loan. These tools are like second cousins – similar but still very different. 

With a cash-out refinance, you take out a bigger mortgage. This mortgage pays off your original loan. Then, you pocket the difference. 

But with a home equity loan, you take out a second loan using your home’s equity as collateral. That means you’ll be stuck juggling two mortgages.  

Both lending options allow you to spend the money how you want. Pump the septic tank. Pay for your kid to go to college. Splurge on a convertible. It’s your money, after all. However, if you default on either a cash-out mortgage or a home equity loan, you risk losing your home. 

Tennessee homeowners tend to stick with a cash-out refinance because it’s easier. They only have to worry about one monthly payment – not two. But some people roll with a home equity loan to avoid expensive closing costs. 

Still, weighing your options? We can help. Contact us online or by calling [insert phone #] to be connected with a Mortgage Coach. 


What Fees Are Associated With a Cash-Out Refinance?

Maybe you want to pay off your student loans. Or, maybe you want to vacation in Iceland. No matter your goals, it’s important to consider the fees associated with a cash-out refinance. 

As with a traditional refinance, you’ll have to pay closing costs. These costs range from 2% to 6% of the loan amount. So, if your refinance mortgage is for $350,000, you can expect to pay between $7,000 and $21,000. 

You should also mull on private mortgage insurance (PMI). If you borrow more than 80% of your home’s value, you’ll have to pay PMI. For most Tennessee homeowners, PMI is between 0.55% to 2.25% of their original loan amount annually. 


Other Factors To Consider With a TN Cash-Out Refinance

If you’re drowning in high-interest credit card debt, we get it. You may see a cash-out refinance as a life-saving dinghy, bobbing out there in the white-capped sea of adulthood.

But before you start paddling toward this metaphorical raft, give these factors some thought:

  • Default Risk: Sure, a cash-out refinance has its advantages. However, it can also be super risky. If you can’t afford your new monthly mortgage payments, you risk losing your home.  
  • Higher Interest Rates: A cash-out refinance involves borrowing more money. As such, these loans come with interest rates that are 0.125% to 0.5% higher than those of non-cash-out refinance mortgages. 
  • Bad Habits: Remember: If you tend to live beyond your means, more money won’t fix that. If anything, a lump sum will enable you to spend more. 
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Work with a trained Mortgage Coach like Crystal.

The Dash Refinancing Process    

Let’s face it: Refinancing is normally a huge headache. That’s because the average mortgage lender in Tennessee makes the home financing process unnecessarily complicated. And when you have a question – trust us, you will – loan officers never pick up the phone.

Luckily, we have simplified the lending process at Dash Home Loans by firing inefficient middlemen and shredding superfluous paperwork. The result? You’ll get qualified for a cash-out refinance mortgage in Tennessee faster than you can say “home sweet home.”


Apply for a Cash-Out Refinance Loan With Dash Today

Feeling a little nervous about refinancing? Take a deep breath and chill out. At Dash Home Loans, we’ve got your back. Reach out today and we’ll connect you with a Mortgage Coach. 

Ready to get started? Sweet! Click ‘Apply now’ to get started. 

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Helping Homeowners in Tennessee

Tennessee 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

Tennessee Cash-Out Refinancing FAQs

How does a cash-out refinance work?

A cash-out refinance is similar to a traditional refinance. The biggest difference is that you’ll take out a new, larger mortgage. After paying off your original loan, you’ll walk away with the difference. 

 

Is a cash-out refinance worth it?

It depends. If you’re using the money to consolidate higher-interest debts or improve your home, it could be beneficial. But you have to consider these benefits alongside the risk of foreclosure. 

 

How much money can I cash out when I refinance?

It varies. Typically, lenders limit cash-out refinance loans to 80% of a home’s value. But with a VA cash-out refinance, eligible veterans can cash out 100% of their home’s equity. 

Is a home appraisal required?

Yep! An appraisal allows lenders to calculate your home’s equity.