With a constantly changing housing market comes significant changes to home mortgage loans. The Indigo Mortgage New Mexico team is here to tell you more about these changes and how they impact cash-out refinances.

Fannie Mae and Freddie Mac are now making it harder and more expensive for borrowers to do a cash-out mortgage transaction. The biggest change that is coming is that if a borrower is going to do a cash-out refinance after March 30th, the mortgage they are paying off will have to be seasoned for one full year before the loan is eligible. This means that the primary mortgage on the home will have to be seasoned for twelve months before a borrower can take cash out on a full refinance. If you are a borrower who purchased or processed a refinance within the last year and want to take cash out, you must have the new loan funded by March 30th. Although it may seem very soon, you still have time.

The other significant changes from Fannie Mae and Freddie Mac are that it will be much more expensive to do a cash-out refinance. Borrowers can take a higher interest rate on a cash-out refinance than just a straight refinance or a purchase. These changes are risk-related, as they expect home prices to slow down. They also don’t want home loans with a high loan-to-value ratio sitting on the books. Keep in mind; these changes do not affect borrowers looking to do a simple refinance for a better rate and payment.

If you are interested in refinancing your mortgage loan and don’t know where to start, reach out to the loan experts at Indigo Mortgage. We are here to help you find the best mortgage rate possible.

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