Learning Objectives
- Calculate refi break-even in months
- Compare rate/term vs. cash-out vs. streamline programs
- Explain LTV caps on cash-out by program
- Identify life events that warrant a refi conversation
Break-Even Math
Break-even (months) = total closing costs ÷ monthly savings. If a refi costs $4,000 and saves $200 per month, the break-even is 20 months. If the borrower plans to stay longer than break-even, the refi makes sense.
Streamline Programs
- FHA Streamline — no appraisal, no income, must lower payment
- VA IRRRL — no appraisal, no income for most lenders, must lower payment
- USDA Streamline — limited income re-verification
- Conventional — full underwrite required
Cash-Out LTV Caps
- Conventional — 80% LTV max
- FHA — 80% LTV max
- VA — up to 90% (some lenders 100%)
- USDA — no cash-out program
Key Takeaways
- Refi makes sense if the buyer stays past the break-even point.
- Streamlines remove appraisal and income re-verification.
- Cash-out caps differ sharply by program.
End-of-Module Exam
Module 23 Exam — 5 questions
Pick the best answer for each question. Pass with 80% or higher to mark this module complete.
- 1.
Break-even is calculated as:
- 2.
A VA IRRRL typically does not require:
- 3.
Conventional cash-out is capped at:
- 4.
Which program has no cash-out option?
- 5.
A refi makes financial sense when the borrower plans to:
0 of 5 answered