by William Pirraglia
Maximum refinance cash out depends on your income, home value and mortgage program.
Your equity, the difference between your home's value and your mortgage balance, limits the amount of cash you can take out. You cannot receive more cash than your home is worth, even if you could find a lender willing to finance up to 100 percent of the property value. Your equity is your ownership amount, which controls the maximum cash you could receive at closing. For example, a home worth $200,000 with a mortgage balance of $75,000, means you have equity of $125,000.
Your regular gross monthly income, when compared with your debt ratio, determines the maximum mortgage amount for which you qualify. Your "housing ratio," or estimated new mortgage payment divided by your regular monthly income, should not exceed 28 percent. Your "total debt ratio," the new
mortgage payment plus all other monthly debt payments, should not exceed 36 percent of your gross monthly income. Therefore, your monthly income and debt payment requirements will control the amount of cash you can get with a refinance.
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