Mortgages Made Simple with Rick Gundzik

Thursday, September 10, 2009
Non Recourse loans and Cash Out Refinances - September 10, 2009
What's the difference between a recourse and a non-recourse loan? and How much equity should one have in a property before considering a cash out refinance? This week Mortgages Made Simple logo we answer these two listener questions.

A recourse loan allows the lender to try to collect the money they lose on a foreclosure or short-sale from the homeowner in what's called a deficiency judgment. A non-recourse loan, on the other hand, doesn't allow the lender to collect any money on their loss. This is the most common type of residential loan.

A cash out refinance now requires a homeowner to have at least 20% equity depending upon certain loan characteristics. Jumbo loans, loans over $417,000, require more equity. The problem in the current lending environment, however, is if your credit scores are below 740 the rate is increased. So it might be better to contact a local bank for a 2nd in order to get a better interest rate.



If you have any questions you would like us to answer on our show, please call our listener line at 714-519-7833 or email mortgagepodcast@gmail.com.

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