Considering a mortgage refinance? Here are 9 Must-Knows about the VA Cash-Out Refinance Loan for veterans.
VA-backed refinance options are gaining popularity with qualified borrowers who are looking to explore lower interest rates or access their home’s equity through cash back. The VA Cash-Out Refinance Loan offers many of the advantages characteristic of the VA loan program and might be right for you if you’re a veteran currently considering a home refinance. When weighing your options, keep the following in mind.
(1) Your home’s equity equals cash.
The VA Cash-Out Refinance Loan gives qualified veterans the opportunity to refinance their VA or non-VA home loan into a lower rate while extracting cash from the home’s equity. Don’t confuse this with a home equity loan. A home equity loan would be a second loan you take out and it would run alongside your existing mortgage, but the VA Cash-Out Refinance Loan replaces your existing mortgage entirely.
(2) The Cash-Out Refinance Loan offers advantages of the VA loan program.
Many homeowners choose the VA Cash-Out Refinance option over other refinancing products because it offers advantages characteristic of the VA home loan. Typically, the Cash-Out refinance option comes with more flexible credit requirements, a lower interest rate and no private mortgage insurance. And most homeowners also have the ability to repay the loan over a longer period of time when using this option over other refinancing products available.
(3) Your current loan doesn’t have to be a VA loan to qualify.
The VA Cash-Out Refinance option is available regardless of your original mortgage loan type. Homebuyers can refinance a conventional, FHA, USDA or VA loan using the Cash-Out option.
(4) You may be able to refinance 100% of your home’s value.
Qualified homeowners can refinance up to 100 percent of their home’s value, but in some cases, the maximum percentage homeowners can finance is lower.
(5) The standard VA loan processes apply.
VA Cash-Out Refinance Loans follow the standard VA loan credit and underwriting processes. An appraisal is also required, as the amount you may refinance hinges upon the current valuation of your home.
(6) You aren’t required to pay closing costs and the VA funding fee out-of-pocket.
The closing costs and VA funding fee can be rolled into your loan’s total and be financed.
(7) You may not be required to take any cash out.
If you’re refinancing from a conventional or other loan program, you are not required to take cash out. This may be a good option for you if you’re primarily seeking to refinance into a VA loan to take advantage of its other beneficial features.
(8) You must intend to live in the property.
The VA does require that you certify that you intend to occupy the home you’re refinancing in order to qualify.
(9) The VA does not restrict how you use your cash.
The Cash-Out Refinance is intended to provide you access to the equity you’ve built up in your home, and the VA doesn’t put restrictions on what the money can be used for. Many homeowners choose to make major repairs, remodels or upgrades to their homes. Other popular choices include paying off debt or emergency expenses or covering college tuition and books.
Aligned Mortgage strives to provide transparent, valuable information about the VA home loan and we pride ourselves on being a resource to military and veteran homebuyers as well as real estate professionals committed to helping those who’ve served to buy a piece of the land they’ve sworn to defend. Please reach out to us with any questions at all about the VA home loan entitlement or the information provided above.