Cash Out Refinances Are More Expensive

Cash Out Refinances Are More Expensive

In 2022 Fannie/Freddie increased LLPAs (loan level price adjustments) for cash out refinances, making it more costly to pull cash out.

Freddie Mac announced for 2023 a seasoning period of 12 months before cash can be pulled out of a property (note date to note date) to pay off a mortgage. When one agency makes an announcement the other follows, so consider this a Fannie/Freddie thing.

Twelve months seasoning affects a cash out Fannie/Freddie loan, one can do a limited cash out (rate/term) after six months.

While these changes make cash out more costly, FHFA (regulator of Fannie/Freddie) announced improvements for costs affecting first time buyers utilizing Home Ready or Home Possible type loans.  This change is most helpful for those in the lower income brackets.

Loan products and programs change often, some good, some not.  With any home mortgage, loan originators need to stay up to date.