Frequent Contributor
Posts: 379
Registered: ‎03-31-2012
Re: Consolidate debt with first time mortgage NOT refinance or equity loan

What style of loan are you applying for to purchase your home?


I am not sure about debt consolidation loan with mortgage, but with a cash out loan there are some options if your home appraises well.


You can not cash out more then 85% equity to be considered for FHA, and if you do so within 12 months you they will take the lower amount between the purchase price and the appraisal.


So if you pay 150K for your home and desire to cash out within the first 12 months of owning the home you will need to have paid 22.5k off of the original loan to reach the minimum equity %..  So if you pay off 22.6k you could take the 1k out in a re-fi.


If you wait to month 13 they will look at your appraisal value of the home.  So if you home appraises for 180K and you loan is for 150K your loan to value % would be 83%.  This would allow you 2% cash out of roughly 3K.


With a conventional loan you are looking at needing a 20% equity prior to qualify for a cash out re-fi or debt consolidation. With your example of a purchase price of 150K and a cash out request of 23K your home would have to appraise for 216.5K to get the cash out you need. 


Getting your score above 720 would also greatly help you with interest rates, and a cash re-fi.  Are you Credit Cards below 30% UTL?  This could be a good boast to your score. 


Good luck