A conforming cash-out refinance is a type of cash-out refinance that meets the purchasing guidelines set by Fannie Mae and Freddie Mac, the government-sponsored enterprises (GSEs) in the US housing market. This allows you to refinance your existing mortgage for a higher amount than you currently owe and receive the difference in cash, while adhering to specific criteria established by the GSEs.
Eligibility:
- Meets Fannie Mae/Freddie Mac standards for cash-out refinances.
- These standards may be similar to, but not necessarily identical to, those for conforming purchase loans.
- Minimum credit score (often 620+).
- Healthy debt-to-income ratio (ideally below 45%).
- requirements may vary depending on lender and loan.
Benefits (if conforming cash-out refinance existed):
- Potentially lower interest rates compared to other cash-out options (due to conforming loan benefits).
- Wide lender availability (similar to conforming loans).
Considerations (if conforming cash-out refinance existed):
- Loan limits would still apply (same as conforming loan limits).
- You would need to meet conforming loan eligibility requirements (credit score, debt-to-income ratio, etc.).