Should I Get a Cash-Out Refinance in Florida?
6 minute read
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January 3, 2023

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If you’re a homeowner considering cash-out refinance in Florida, you’re in the right place. 

Cash-out refinancing allows eligible Florida homeowners the opportunity to access a lump sum cash payment at a good interest rate. 

Homeowners can use the money they receive from cash-out refinancing for home improvements, debt consolidation, or any other expense they consider worthwhile. 

Let’s look at how cash-out refinancing works, why you might want to get one, and how to qualify for a cash-out refinance in Florida. 

How cash-out refinancing works

Cash-out refinance is when homeowners replace their current home loan with a new mortgage for a larger amount. 

The new mortgage pays off the first mortgage completely, and borrowers get the “leftover” money in a lump sum payment, usually as a deposit directly into their bank account. 

Start your cash-out refi here

Why should I get a cash-out refinance in Florida?

Homeowners in Florida might apply for cash-out refinance for a variety of reasons since there are no requirements for what the money has to be used for.

Lower interest rates

Lowering interest rates and reducing monthly mortgage payments are the most common reasons for refinancing. 

Because interest rates for cash-out refinance in Florida are typically lower than most personal loans and credit cards, borrowers can take advantage of less expensive financing options, get the money they need, and pay less in fees and interest.

Improved credit score

Homeowners who use cash-out refinancing to consolidate their debt payments into a single, lower-interest monthly payment usually see a boost to their credit score and improved finances.

Pay for big-ticket expenses

Additionally, many homeowners use the money they receive from a cash-out refinance to pay for unexpected medical expenses, education costs, vacations, or home improvements. Florida does not restrict how borrowers can use the funds. 

Cash-out refinance rates in Florida

Cash-out refinance mortgages offer some of the lowest rates available compared to other personal loans. 

And cash out refinance rates in Florida won’t cost you more compared to no-cash-out refinance—the interest rates are the same whether you receive a lump sum cash payment or not. 

Because all mortgage refinance options use your home as collateral, lenders have less risk than traditional loans, which means lower interest rates for borrowers like you. 

Qualifying for cash-out refinancing in Florida

Qualifying for a cash-out refinance in Florida focuses on three key areas

  1. Credit score
  2. Income 
  3. The amount of equity in your home

Credit score

Your credit score is an essential qualifier for any home loan. Lower credit scores can affect eligibility or the interest rate you might receive. 

A good rule for cash-out refinance in Florida is that higher credit scores mean lower interest rates. Lower interest rates can save you thousands over the lifetime of your home loan.

Income 

Mortgage lenders need to know you can repay the money they loan you. Lenders typically look at a borrower’s income from all sources and the total monthly debt they carry—this is called your debt-to-income ratio (DTI). Most lenders look for a maximum DTI of 43%.

Home equity

A cash-out refinance in Florida uses the equity in your home, so you must have enough equity in your home to cover the loan amount. 

In other words, your home’s assessed value has to be more than you owe on your current mortgage. For most conventional cash-out refinance loans in Florida, homeowners can borrow up to 80% of the home’s value. 

Why Florida is a prime area for a cash-out refinance

With a population of just over 22 million, Florida comes in as the third most populated state in the country (California and Texas rank first and second, respectively). 

Florida is a popular tourist destination, bordered by the Atlantic Ocean and the Gulf of Mexico, with stunning beaches and warm weather. 

In addition to major entertainment and professional sporting venues, NASA, and Disneyworld, the Sunshine State boasts robust agriculture and transportation industries totaling $1 trillion in GDP, making it the fourth-largest economy in the United States. 

Florida housing market

With a median home price of $406,988, housing prices jumped a whopping 27.8% since this time last year, helping homeowners earn equity.

Home equity is the percentage of your home that you actually own, and homeowners build equity in two ways

  1. Paying down their mortgages 
  2. Increasing home values

The strong Florida real estate market and recent gains mean many homeowners have seen their home equity increase without added expense on their part. 

In other words, if you own a home in Florida, you could have more equity to tap into if you’re considering cash-out refinancing. 

Most cash-out refinance lenders allow homeowners to use up to 80% of the equity in their home for a cash-out refinance mortgage.

Let’s look at an example of a home currently appraised at $400,000 and $250,000 still owing on the mortgage. 

In this scenario, if you tapped into 80% of your equity, you could receive $70,000 as a lump sum payment to spend as you wanted. 

Is cash-out refinancing right for you?

If you’ve built up the equity in your home and want to: 

  • Start a new business
  • Take a once-in-a-lifetime vacation
  • Make home improvements or repairs
  • Pay for medical expenses
  • Pay for a child’s education 

Cash-out refinancing could help if you don’t have the cash to do so.

Get started on your cash-out refi

Before applying for a cash-out refinance in Florida, make sure you can afford to make the monthly payments. 

It’s important to remember that you’re using your house as collateral, so if you fail to repay your refinance loan, your lender could start foreclosure, just like with your current mortgage. 

Apply for cash-out refinance in Florida

Cash-out refinance in Florida can help you move in the direction of your dreams today. 

Are you ready to apply for a cash-out refinance? At AAA Banking, we’re here to help. 

When you partner with AAA Banking to buy your new home or refinance your current mortgage, we put our expertise and knowledge to work for you and help you find the best available deal.

Contact one of our licensed loan officers today to learn more about cash-out refinance in Florida, or apply for a new mortgage.

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