You would need to find out first if you have any equity in your home. You may not, as some in our area have found out. What is sounds like you are looking for is a Re-Finance Loan. Check with the lender that is currently holding your mortgage to see what they have to offer you. They can tell you what you will have to pay to close the new loan.

In my opinion, you probably aren't going to see very many incentives, at least not gov't/tax related ones like the first time home buyer credit, specifically aimed at or available for cash-out refinances (which is what you are describing).

Your best bet is to speak with a local lender who can give you some advice about your specific situation and what loan programs are open to you. Make sure you consider the total cost new loan vs. old.,not just P & I (i.e. make sure you are looking at total payment including PMI which you may not be paying now but might have to with a new, higher LTV loan as well as closing costs, interest rates, etc).

Also consider how long and why you plan to stay in this house. See the blog post I wrote a few days ago (linked below) for more information about why you could even be better off selling and buying a new home that fits your new needs vs staying in your current one.

Good luck with your decision.

We sugget that you speak with a mortgage broker in your area. They will be able to advise you on your credit score (FICO), what programs are available, FHA limits and guidelines. You can also discuss with the mortgage broker if cashing out equity is a good thing to do right now. Every person's situation is different - what is good for one may not be good for another. In working with a good mortgage broker, you can come up with a plan on how to achieve your goals.

Bob & Richelle Ward, Realtors, ABR
Prudential Connecticut Realty http://www.connecticuthomesforsale.com
email: rward@prudentialct.com