Although most clients are not refinancing now to take cash out due to the higher interest rates, there are still situations (like divorce or paying off credit card debt) where a cash-out refinance is still a great option. Unfortunately, Freddie Mac has added a requirement for cash-out refinances that will prevent some clients from being able to take advantage of this product.
Effective immediately, the following applies: when the proceeds of a cash-out refinance are used to pay off a first lien mortgage, the first lien mortgage being refinanced must be seasoned for at least 12 months. In other words, you must have had your current mortgage for at least 12 months before you can refinance it as a cash-out refinance. There are exceptions for equity buyouts and a few other situations. I have been puzzling over the reason behind this guideline change, but I can’t produce a satisfactory answer. Please contact Margie to discuss further