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Is a cash out refinance better than a 203k loan for small renovations?

by JHornby from Covington, Louisiana. Apr 19th 2013 Reply


William J Acres (William_Acres)
#1 ranked lender in Arizona - 8,414 contributions

Between the two, the cash out certainly would be an easier loan... and no restrictions on the funds.. another option would be a HELOC... you apply one time, and you have unlimited access to your equity without every having to reapply.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Apr 19th 2013
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Joe Shamie (Joe Shamie)
#4 ranked lender in New Jersey - 1,412 contributions

I dont know if its batter but it will certainly be easier since the fund will be goven to you at closing without any conditons. The 203k will require the funds to be released in phases as the work is completed and verified via inspection.

Apr 19th 2013
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Carlo Sanchez (MortgageLendingPro)
#0 ranked lender in Utah - 1,163 contributions

A cash out refi will be alot easier and probably cheaper. A 203K loan is an FHA loan and if you currently have a conventional loan witih NO MI then you would then have a loan with MI.

Apr 19th 2013
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Garth Cook (garth@garthcook.com)
#5 ranked lender in Louisiana - 12 contributions

As far as better, it depends. On an FHA 203k you may get the benefit of a higher appraisal because the appraised value is based on the work being completed. However, on a 203k you would have mortgage insurance which is costly. Depending on how small of a renovation, what your current appraised value vs new loan amount is, what your current rate is would determine which is best. Could be better to do a line of credit or a 203k or cash out on existing mortgage.I am local. 225 300 8895.Garth Cook

Apr 19th 2013
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Dave Metsker (DaveMetsker)
#37 ranked lender in Oregon - 2,317 contributions

Cash out is far better; no plans, permits or future value required.

Apr 19th 2013
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John Thomas (delawaremortgages)
#6 ranked lender in Delaware - 16 contributions

The big determination is the loan to value. Cash out is limited to 85% loan to value for most lenders. So if you need to go above the 85% loan to value then the FHA 203k loan would be the only option. If you are at lower loan to value then the Cash-out refinance would be the better option.John R. ThomasPrimary Residential MortgageNMLS 38783http://www.DelawareMortgageLoans.net

Apr 19th 2013
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Patty Harrison (PattyHarrison)
#94 ranked lender in Illinois - 64 contributions

Equity line would be best for small renovation then you can use what you need without having to refinance your 1st mortgage; but if you haven't refinanced your 1st mortgage in awhile you may also benefit by the extremely low rates that are out there.

Apr 19th 2013
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Elden Lewis (elewis_409_299)
#41 ranked lender in Indiana - 223 contributions

A lot depends on the amount of equity you have in your home as it stands. You will need considerable equity to do a cash out refi or to get an equity loan (HELOC). I would only use a 203K if you had little or no equity. 203K loans can be complicated, time consuming and the closing cost are more than a 203B FHA loan.

Apr 19th 2013
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Ken Burrows (mortgagesforamerica)
#19 ranked lender in Nevada - 572 contributions

203K loan you will have high MI rates. It's always better to go conventional if you can.

Apr 19th 2013
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Ray Hazucka (r.hazucka@mybbmc.com)
#65 ranked lender in Illinois - 36 contributions

The cash-out refinance will result in less costs to you.

Apr 19th 2013
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Peter Savino (855411LEND)
#100 ranked lender in New Jersey - 332 contributions

small equilty loan 2nd mortgage is easier then both

Apr 19th 2013
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Jerry Potter (JerryPotter)
#82 ranked lender in Washington - 37 contributions

A cash-out loan would be best, provided you can obtain the amount you need to do the work your wanting. The 203k has many more layers, paperwork and can be a timely process. However, it does allow to finance the cash needed to do the work into the new loan based upon the property value of the future completed improvements.

Apr 19th 2013
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Craig Prickett (cpmtgnow)
#159 ranked lender in Florida - 97 contributions

simpler loan to do a cash out . If the repairs on your property are severe enough to where your property doesnt meet standards then 203k migh end up being your only choice. Im in Florida if need a loan. www.firstfloridafin.com 954 558 4430

Apr 19th 2013
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Charlie Sparks (CharlieSparks)
#9 ranked lender in New Mexico - 397 contributions

I would recommend applying for a HELOC, then cash out, then 203k in that order. Your local bank or credit union is usually the best option for a HELOC.

Apr 19th 2013
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Joe Metzler (JoeMetzler)
#18 ranked lender in Minnesota - 3,727 contributions

Too many missing variables to make an accurate assessment, but generally speaking, go with the cash out refinance if possible.

Apr 20th 2013
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Carlos Figueira (carlosfigueira)
#108 ranked lender in New Jersey - 198 contributions

203k should only be used if the appraisal will have a cost of cure or if there is no equity and you are adding major value to home thru renovations (appraiser will use future value based on the improvments from new loan) seems like you are interested in small renovations so CASH-OUT refinance or HELOC will be best options.

Apr 20th 2013
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