Mortgage Refinance | Discover Home Loans (original) (raw)

Let’s use the following example to walk through calculations for cash out refinance (you can substitute your home’s values in the calculations below or use our refinance calculator):

A homeowner owes 100,000onafirst−lienmortgageloanand100,000 on a first-lien mortgage loan and 100,000onafirst−lienmortgageloanand45,000 on a second-lien home equity loan.

The current home value is $400,000.

The combined loan amount is 100,000+100,000 + 100,000+45,000 = $145,000.

The current CLTV is 145,000/145,000 / 145,000/400,000 = 36%.

With Discover, homeowners can borrow up to 90% CLTV: 0.90 x 400,000=400,000 = 400,000=360,000 could be taken out against the current value of the home.

In this example, since 145,000isowedonexistingloans,themaximumcashoutvaluepossiblewithaDiscoverloanis145,000 is owed on existing loans, the maximum cash out value possible with a Discover loan is 145,000isowedonexistingloans,themaximumcashoutvaluepossiblewithaDiscoverloanis360,000 - 145,000=145,000 = 145,000=215,000. While borrowers do not have to take out the full amount available, finding these values can help homeowners to understand borrowing limits before applying for a loan.