VA Cash-Out Refinance Loan
If you’re considering refinancing your mortgage, you should consider a VA cash-out refinance loan. This refinancing option allows you to turn the equity in your home into cash. By refinancing your home with a VA cash-out loan, you can take the cash you receive and use it toward paying off debt, emergency costs such as medical bills, or any other pressing needs. And, unlike the VA streamline refinance loan, your original mortgage does not need to be a VA home loan.
For current service members and veterans, a VA cash-out refinance can be an advantageous way to get the cash you need quickly and potentially lower your existing mortgage rate. Determine if a VA cash-out refinance loan through United Executives is the right mortgage solution for you.
What Is a VA Cash-Out Refinance Loan?
A VA cash-out refinance loan is a type of loan backed by the Department of Veterans Affairs (VA). Like other refinancing loans, a VA cash-out refinance allows you to replace your current mortgage. It’s considered the more flexible of the VA refinancing options because you are able to receive cash and it can be used for paying off non-VA home loans. By taking the equity in your home and turning it into cash, you can use that money to help settle other debts and improve your financial situation, cover emergency expenses, or make improvements to your home.
Benefits of a VA Cash-Out Refinance
Many borrowers find that VA cash-out refinance loans are advantageous because they can allow for repayment of the loan over a longer period of time, and often at a lower interest rate. However, if you do not need to cash out, you might consider a VA streamline refinance instead.
Put simply, the primary benefits of a VA cash-out refinance loan include:
- VA cash-out refinancing can be used for paying off VA home loans, FHA loans, Non-QM Loans and Conventional home loans
- Cash can be used for virtually any purchase
- No private mortgage insurance (PMI) required
- Improved loan terms (could possibly secure a lower interest rate and monthly payments)
A VA cash-out loan is determined by your financial situation. While refinancing is often beneficial to those who have improved their credit and overall financial health since applying for their original mortgage, it may be unfavorable for those who have not. For example, if your credit is worse off, a VA home refinance could increase your interest rate and mortgage payment.
Think you qualify for a loan? Contact us today to find out!
How Does a Cash-Out Refinance Work?
A VA cash-out refinance is based on several factors including an appraisal on the value of your home, the remaining amount on your original mortgage loan, and your financial standing. To determine the cash-out amount, the lender will take the difference between the remaining balance of your mortgage and your home’s current value. Once the amount and terms of the VA cash-out loan are determined, and you agree to them, the new mortgage will begin and you will receive any cash available from the VA home refinance.
Note that while the VA cash-out refinance leverages the equity in your home, it is not the same as a home equity loan. Instead, it replaces the original loan in its entirety.
Who Pays the Closing Costs on a VA Loan?
With a VA cash-out refinance loan, the only out-of-pocket closing costs are the appraisal and pest inspection. The remaining closing costs such as standard underwriting, processing, escrow, and title fees can be rolled into your new home loan along with prepaid interest, prepaid taxes and insurance, and your new impound account.
You can also include the VA funding fee into the loan if needed. It is important to note that including the VA funding fee in your refinance cannot exceed the value of the home. Some borrowers may be exempt from the VA funding fee based on the guidelines set by the Department of Veterans Affairs, which includes certain veterans who were injured while in service. There are three possible VA funding fees for a VA cash-out refinance: first-time use, subsequent use, or exempt.
What Is the Max Cash-Out on a VA Loan?
For VA loans of any kind, there is no standard maximum loan amount. Instead, the Department of Veterans Affairs limits the amount of the loan it will guarantee, which is 25% of the total home loan. Typically, lenders will set loan limits in compliance with Fannie Mae or Freddie Mac. However, those with homes in places that have a higher cost of living may be approved for a larger loan.
In some cases, borrowers may be able to refinance their loan up to 100% of their home’s value with Griffin Funding, however most VA cash-out loans go up to 90%, leaving 10% equity in the home.
Since the amount of mortgage debt you need to refinance affects how much cash you’ll receive to repay your debts and meet other needs, you should keep in mind that including the VA funding fee in the loan can reduce how much you get back.
VA Cash-Out Refinance Guidelines
- Status as a current service member or veteran (and certain spouses)
- Certificate of Eligibility (COE) from the Department of Veterans Affairs
- You must occupy the home as your primary residence (and continue to do so)
- 580 credit score or higher
- Income verification is required
- Must complete an appraisal and pest inspection
Unlike a VA IRRRL loan, your original mortgage does not need to be a VA-backed home loan. For further clarification on VA loan requirements, and to determine whether you qualify, speak with one of our loan officers.
How to Apply for a Cash-Out Refinance Loan
Applying for a VA cash-out refinance is similar to applying for any other mortgage refinancing. You can submit an application for your VA home refinance online or by working directly with one of our loan officers.
Once the application is complete, we may request further documentation from you to verify your information such as W2s, tax returns, and your COE, among others. We will then complete the necessary paperwork and order an appraisal for your home, however, you must order the pest inspection. Once the appraisal and pest inspection are complete, we will obtain the loan approval and collect any further documentation that is necessary.
You will then sign your final loan documents, and after they have been carefully reviewed by one of our loan officers, you will receive your funding. While this might seem like a lengthy process, we make every effort to make it a pleasant experience and to have your refinance completed within 30 days.
Refinance Your Home Today
If you’re ready to make the most of refinancing your mortgage, call us at (626) 967-9000. United Executives is dedicated to helping our customers find the most advantageous home loan solutions through personalized service and streamlined processes.