VA Cash-Out Refinance

Get Cash From Your Homes Equity

Have a question about the VA Cash-Out Refinance Loan call 855-956-4040 to speak with a loan officer.

As a veteran, purchasing a home is probably one of the most important investments you will ever make. Also, it is worth noting that you will likely want to do everything that you can in order to make sure that your home is as up to date and comfortable as possible. However, you know that it can be challenging and time-consuming to build up the needed savings in order to complete home renovations or repairs.

If you have equity in your home and want to use it to repay some debt, a VA cash-out refinance is an excellent option. Did you know that a VA cash-out refinance will essentially replace what you currently owe on your home loan with a new mortgage?

If you are a veteran who needs extra money, you should consider applying for a VA cash-out refinance. Some of the popular reasons for refinancing with VA cash-out are debt consolidation, paying off credit cards, and home improvement.

Cash-out refinance can help you accomplish your various home improvement goals. As a result, you do not need to rely on a personal loan, credit cards, or a second mortgage.

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What is a VA Cash-Out Refinance?

If you are considering purchasing a new grill, or barbecue, you will be faced with a multitude of options to choose between. However, there is one choice which you will.

Did you know that through a VA cash-out refinance, you can easily repay your mortgage loans while tapping into your home equity? As a homeowner, you will have to apply for a larger home loan that will replace your current loan.

After that, you will receive the difference between the new loan and the old loan in cash during the closing. It is worth noting that when you are ready to repay the newloan, you will be expected to repay the original loan balance and the amount that you received in cash. You should know that a VA cash-out loan is quite different from a standard home equity loan. Keep in mind that with a VA cash-out loan, you replace your current mortgage with a new loan. This is great as it allows immediate access to cash.

Did you know that these mortgage loans are easily available to veterans, qualified service members, or spouses who currently have FHA loans, conventional loans, VA loans, or USDA loans? The best thing is that with a VA cash-out refinance, veterans can refinance their current mortgage. This is regardless of whether it is a conventional loan or a VA loan. So, we can say that qualified borrowers can receive cash in order to pay off debts, make home improvements, or fund education expenses.

Also, keep in mind that the amount of cash you will get depends mainly on how much equity you’ve in your home. Did you know that all VA refinance loans that are not IRRRLs are called cash-out loans? If you opt for a VA cash-out refinance, you will usually receive your proceeds in the form of a lump sum.

Types of VA Cash-out Refinance

We can break down the VA cash-out loan into two sub-categories. These are:

1. Refinancing to receive cash at the time of closing

2. Refinancing to repay any loan that’s not a VA loan

Note that VA cash-out loans are different from VA streamlines. This is because these loans require you to provide documentation, like pay stubs, an appraisal, W2s, and bank statements, among others. Did you know that VA cash-out loans also need a higher funding fee compared to VA streamlines? It is worth noting that the most prevalent funding fee amount is 2.3 percent of the loan amount. However, note that the fee might be a little higher if you have used your VA home loan benefit in the past.

Cash at Closing

One of the best things is that the VA cash-out loan allows you to obtain cash for any purpose. You can get a loan with a higher balance than you currently owe. You will receive the difference, minus closing costs, at the time of closing.For instance, you owe $100,000 on your current mortgage, and then open up a new loan amount (excluding the funding fees) of $123,000. Your new loan requires about $3,000 in closing costs. At the time of closing, the escrow company will send you a check in the amount of $20,000. Note that while the monthly payment and loan balance increase, you have an extra $20,000 in your bank account.

Refinancing to Repay a Non-VA Loan

Did you know that the other main purpose of VA cash-out loans is to refinance and repay any loan that isn’t a VA loan? For instance, suppose you purchased your home with a conventional loan and put 20 percent down. However, now home prices have declined, and you cannot refinance with another conventional loan. This is because your loan is 95 percent of the new value of your home. The good news is that you can use a VA cash-out loan in order to repay your existing conventional loan.Did you know that VA cash-out loans can usually be up to 100% of the value of a home? This is why refinancing with a VA loan is usually the only viable option in many cases.

Benefits of VA Cash-Out Refinancing

It is no secret that there are a lot of advantages and benefits to using the convenient VA cash-out refinance program. If you are a veteran, refinancing, and then tapping into your home’s equity can provide you with an additional income source. Also, it is worth noting that you can use the proceeds from a VA cash-out refinance in order to repay credit card debt, fund your child’s college education, and make home improvements.You will also be glad to know that there are also no restrictions or limitations on how you use the funds that you take out. Also, as you are refinancing your VA loan, you might even be able to lower your interest rate. That is especially true for homeowners who are looking to refinance their VA loans as well as others who would like to convert an FHA loan or a conventional loan to a VA loan. Did you know that a VA cash-out refinance can be considerably more beneficial compared to taking out a personal loan for many reasons?

Home Renovations and Improvements

From questionable and outdated design choices to a faulty HVAC system, home upgrades are usually necessary. Note that a cash-out refinance is excellent as it allows you to use the equity that you have already earned in order to fund the changes and updates you need.

Debt Consolidation

Did you know that a VA cash-out refinance can also give you the cash that you need to repay your outstanding debts? You can also transfer what you owe to a single, convenient, low-interest payment.

Eliminate Mortgage Insurance

There is no doubt that one of the most significant advantages of converting your non-VA loan to a VA loan is that most VA loans do not require any ongoing mortgage insurance.As a result, you can reduce your homeownership costs by repaying an FHA loan and then canceling the FHA mortgage insurance premium.

More Funds to Invest

Considering the power of compounding interest, note that it can be a smart and prudent move to free up some money and save towards retirement early instead of keeping your funds tied into your home. VA cash-out refinances provide access to funds that you can easily use to increase your retirement savings or create a college fund for your kids.

Costs of VA Cash-out Refinance

Did you know that closing costs comprise the several fees that you have to pay for a mortgage? Some of these closing fees are taxes, appraisal fee, loan origination fee, and title insurance fee. It is worth noting that closing costs usually range from 3 percent to 5 percent of the loan. You should know that you have to pay these costs at closing if you would like to avail a VA cash-out refinance.

While you cannot roll these costs into your new loan, you can certainly use some of the home equity cash in order to cover them. Also, note that most borrowers will have to pay a VA funding fee. Did you know that the funding fee for cash-out refinancing is 2.3 percent of the total loan amount in case this is your first VA loan? The fee is 3.6 percent if you have had a VA loan in the past.

VA cash-out Refinance – Important Guidelines for 2020

In most cases, VA cash-out refinance requires most of the same records and documentation as conventional home purchase loans. Note that this means they require more paperwork and time than ‘Streamline Refinance’ or the VA IRRRL. If you would like to use the VA cash-out refinance, you should be able to show the following documents: Income documents (such as pay stubs and W2s)

  1. Your bank statements
  2. Your tax returns
  3. Your credit report
  4. Your credit score
  5. A new home appraisal

Also, it is worth noting that you may be asked to provide an itemized list of debts that you would like to pay off with your loan proceeds if you’re planning to use the cash-out funds to consolidate debts.

VA Cash-Out Refinance- Requirements

Are you interested in a VA cash-out refinance? If yes, you will have to make sure that you qualify for the program. Did you know that surviving spouses (unmarried) can qualify for this program? Similarly, current service members, as well as veterans that have served for at least ninety days, are eligible for this loan program.However, it is worth noting that the VA cash-out refinance program is only applicable to primary owner-occupied homes and not investment properties. Note that other requirements might differ depending on the lender, such as banks, who is issuing the loan.In most cases, applicants can’t have a debt-to-income ratio of more than 41 percent. As a borrower, you have to apply for a VA cash-out refinance in almost the same way that you would apply for any other loan.

VA Cash-out Refinance Interest Rates

The benefit of VA cash-out refinance is that it gives veterans as well as active duty service members a great opportunity to refinance into a new loan that has a considerably lower interest rate. Did you know that VA rates are usually the lowest? This is because of the backing and support from the Department of Veterans Affairs.These days average thirty-year VA refinance rate is only 1.875 percent (2.043 percent APR) compared to about 2.625 percent (2.625 percent APR) for a

thirty-year conventional loan.

VA Cash-Out Refinance Considerations

If you are looking to tap into your home’s equity, you should be aware of some important considerations. You should know that unlike a VA Streamline refinance, you cannot roll your closing costs on top of your loan. However, you can easily finance your closing costs into the new loan, provided you can meet your lender’s requirements for loan-to-value (LTV) ratio.

Also, it is worth noting that when you get a VA cash-out refinance, you repay your original mortgage, replacing it with a new loan. And this means that your new loan can take slightly longer to pay off, and your monthly payments can be different. Also, note that your interest rate might change. This is why it is important to go through the closing disclosure from your lender to analyze the new loan terms.

In addition, a majority of homeowners have to pay the VA Funding Fee. This fee directly goes to the Department of Veterans Affairs in order to help keep this loan program going. The good news is that borrowers who get compensation for any service-related disability and eligible surviving spouses don’t have to pay this fee.

Final Thoughts

There is no doubt that a VA cash-out refinance loan is an excellent option for service members and veterans who are feeling financially strapped. If you would like to qualify for the best rates, you must have a good credit score, and your debt-to-income ratio should be low.Whether you are refinancing a conventional loan, FHA loan, or USDA loan, note that you can avail the VA cash-out refinance option regardless of loan type. And many homeowners in the US choose the VA cash-out refinance loan over other kinds of loans mainly because they can pay off the loan over an extended period. Usually, the VA cash-out refinance option also comes with a lower interest rate.