Cash-out refinance in Washington DC

A cash-out refinance replaces your mortgage with a new, larger loan and pays you the difference at closing. On a $700,000 DC home with $350,000 owed, refinancing into a $560,000 loan puts about $210,000 in your hands, minus closing costs. You then have one mortgage payment.

A conventional cash-out refinance caps the new loan at 80% of the appraised value: $560,000 on a $700,000 home. Subtract what you still owe, and the rest is the most you can take out. A VA cash-out can go higher for eligible veterans, though lenders can set a lower cap, such as 90%.

No. The cash is loan proceeds, not income, so it is not reported on a 1099. Interest on the cashed-out portion is generally deductible only if you use the money to buy, build or substantially improve the home securing the loan. Confirm with your tax professional.

No. DC fully exempts residential refinances from recordation tax, including the entire loan on a cash-out. The exemption covers residential property with 5 or fewer dwelling units and is claimed with a one-page notarized Security Affidavit that your settlement agent records with the deed of trust (D.C. Code § 42-1102(21)). On a $500,000 cash-out refinance, the recordation tax is $0, compared with $7,250 at the 1.45% rate. District Mortgage keeps the affidavit on the closing checklist.

Conventional cash-out programs require about 620 or higher, and a higher score gets better pricing. FHA and VA cash-out can work with lower scores. Lenders also look at your debt-to-income ratio and how much equity you leave in the home.

Yes. Lenders add a pricing adjustment to cash-out loans. The size of the adjustment depends on your credit score and how much equity you leave in the home, so taking less than the maximum can get you a better price.

Start with your current mortgage rate. If it is below today's rates, a home equity loan or HELOC lets you borrow without replacing that first mortgage. If it is at or above today's rates, a cash-out refinance can lower the rate and give you cash in one loan. Your loan officer prices both options for you.

Conventional cash-out programs require at least six months of ownership, and some situations require twelve. VA and FHA set their own seasoning rules. If you have owned the home for less time than that, a home equity loan may work instead; ask before you rule anything out.

Anything. Common uses are renovations, adding a rental unit, paying off higher-interest debt, education, or buying an investment property. The loan is secured by your home, so put the money toward things that add value to the home or replace more expensive debt.

Plan for about 2-4% of the loan amount, covering lender fees, the appraisal and title insurance. Two DC costs do not apply: recordation tax is $0 on a residential refinance (claimed with a one-page affidavit at closing), and there is no transfer tax because the property is not changing hands. Closing costs can generally be added to the new loan instead of paid out of pocket; your loan officer shows you both ways so you can compare the total cost.

Only if you choose a 30-year term. The new loan's term is whatever you pick. If you are several years into a 30-year loan, a 20- or 15-year term keeps your payoff date close to the original while still giving you cash. Your loan officer can price each term.

About 30 to 45 days from application to closing. The appraisal usually sets the pace, and a condo building's document review can add time. Having your statements, income documents and insurance ready early keeps it moving; you get a document checklist at the start.

District Mortgage is a licensed mortgage broker, not a bank or direct lender. We do not fund loans with our own money. We take your application, prepare your file, and submit it to a wholesale lender, which funds the loan. NMLS #2819502 — verify us at nmlsconsumeraccess.org.

No. We are licensed in the District of Columbia only, so the property has to be in DC. We cannot accept an application or a pre-qualification request for a property in Maryland, Virginia, or any other state. If your property is elsewhere, nmlsconsumeraccess.org will show you licensed originators in that state.

Alan Trombley, Principal Mortgage Loan Originator, NMLS #2805044, is your loan officer. He is licensed in the District of Columbia and handles every file from pre-qualification through closing.

Our rates page is the source for our pricing. It shows an effective date, the APR next to every rate, and the borrower assumptions each example is priced on. Rates shown anywhere on this site are current rate examples priced for the borrower assumptions published with them. They are not offers of credit or commitments to lend, and pricing changes daily. Anyone quoting a rate from us should cite the effective date it was published with.