Why Might I Want To Get A Va
A VA-backed cash-out refinance loan may help you to:
- Take cash out of your home equity to pay off debt, pay for school, make home improvements, or take care of other needs, or
- Refinance a non-VA loan into a VA-backed loan
On a no-down-payment loan, you can borrow up to the Fannie Mae/Freddie Mac conforming loan limit in most areasand more in some high-cost counties. You can borrow more than this amount if you want to make a down payment.
Va Loan Refinance Faq
How soon can a VA loan be refinanced?
There is a short wait period before you can refinance a VA loan. But its only 210 days. Thats the time between making your first payment on the existing loan and the closing date of your new one
How much does it cost to refinance a VA loan?
That depends on the type of refinance you want. Streamline VA refinances are much less costly than VA cash-out refinance loans.
How can I avoid paying closing costs on a VA refinance loan?
Whichever type of VA refinance you choose, you dont have to pay your closing costs upfront. Instead, you can add them to your new loans balance and pay them down with the rest of your mortgage. Just note that youll pay interest on the closing costs if you go this route.
Do veterans get better mortgage rates?
You bet! VA loans have consistently lower mortgage rates, on average, than any other type of mainstream mortgage.
Are there closing costs with a VA Streamline Refinance?
Yes. But theyre generally lower than other refinance programs. For instance, you wont have to pay for an appraisal which usually saves you a few hundred dollars. And the VA funding fee on a Streamline loan is only 0.5% of the loan amount, as opposed to 3.6% for a VA cash-out refinance.
What is the max cash-out on a VA loan?
Your refinanced mortgage can be 100% of your homes newly appraised value. Thats more than any other type of mainstream mortgage.
How much is the VA funding fee when you refinance?
Benefits Of Cash Refinancing Va
There are many advantages to participating in the VA cash refinance program. Refinancing and tapping into their home equity can provide veterans with an additional source of income. Proceeds from a VA cash refinance can be used to pay off credit card debt, home improvements, or fund a childs college education.
Through cash refinancing, veterans can also lower their mortgage rates and save on interest. Such is the case for homeowners trying to refinance their VA loans and others looking to convert. a regular loan or an FHA loan to a VA loan.
There are certain criteria that homeowners need to meet in order to qualify for the VA cash refinance program. But the requirements are usually less stringent than for regular refinance loans. The Department of Veterans Affairs offers loans up to 100% of the homes value. Qualified borrowers dont have to worry about paying mortgage insurance or prepayment penalties.
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All About The Va Cash
Refinancing can give homeowners the opportunity to adjust their mortgage terms and reduce their monthly payments. Veterans who need more money may want to consider applying for a cash refinance. Eligible people can replace their existing VA loan with a new mortgage or convert a non-VA home loan into a VA loan. Heres everything you need to know about the VA cash refinance program.
Try our refinance calculator.
Va Funding Fee Required
You will be responsible for paying a VA loan funding fee for a Cash-Out loan, and you have the option of financing the VA loan funding fee in full if you dont mind the extra amount added to the mortgage. Remember the issues mentioned above related to adding too much to the loan amount?
Financing the funding fee may not be enough to warrant a credit check for a VA IRRRL, but if you finance the funding fee AND apply for a VA Energy Efficient Mortgage package that adds extra loan funds for approved upgrades? A credit check may be in your future depending on circumstances. Discuss this with your loan officer to learn what the current requirements may be.
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Am I Eligible For Cash
If you were eligible for a VA Purchase Loan, you probably meet the requirements for a VA Cash-Out Refinance Loan. The basic requirements for a VA Cash-Out borrower include:
- Honorably discharged veterans, including veterans of the Reserve and National Guard
- Active duty service members
- Current Reserve and members of the National Guard
- Unmarried surviving spouses
- Commissioned officers of the Public Health and National Oceanic and Atmospheric Administration
- Any veterans that have not been dishonorably discharged
A Certificate of Eligibility is required from all VA borrowers, which Pennymac can provide for you. Some eligible veterans may need to provide a valid DD-214, which is your certificate of release or discharge from active duty.
How To Apply For A Va Cash
The application and approval process for a VA cash-out refinance is very similar to the loan application process for a home purchase, including:
- Youll likely need a VA home appraisal, especially if your existing loan is a non-VA loan. This establishes the current value of your home and helps determine the amount of cash you can take out.
- Youll need a credit check and income verification to verify that youre able to make the new VA loan payments.
- Youll need to establish eligibility with minimum military service requirements, especially if you currently have a non-VA loan. A VA lender can help you request a certificate of eligibility .
Finally, shop around with multiple lenders to compare rates and terms. This can save you lots of money over the life of your VA mortgage and allow you to negotiate better terms.
Please contact our support if you are suspicious of any fraudulent activities or have any questions. If you would like to find more information about your benefits, please visit the Official US Government website for theDepartment of Veteran Affairs or the US Department of Housing and Urban Development.
MilitaryVALoan.com is owned and operated by Full Beaker, Inc. NMLS #1019791.
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Check Your Va Loan Refinance Options
VA-qualified homeowners have great options to refinance via the Department of Veterans Affairs.
Whether you want a lower interest rate or cash-back, a VA program can likely help. Its just a matter of choosing the right refinance program for your needs.
To get started, connect with a loan officer who can help you understand your VA refinance options and choose the right one for your situation.
When Is A Va Cash
Cash-out refinances have long-term implications for your financial health. Youre borrowing a bigger amount, normally for a longer time. And, even with low VA loan refinance rates, thats expensive.
That means you should be careful about when and why you cash out home equity. Its best not to use a cash-out refinance for short-term treats, such as vacations, cars, or weddings. Other, shorter-term types of borrowing may suit you better even if they have moderately higher interest rates.
That said, there are some very smart uses for a cash-out refinance. These can include:
Many people use cash-out refinances to consolidate their existing debts. And that can be great. Because it can hugely reduce the amount you pay on debts and high-interest credit cards from month to month.
But you need to ask yourself how you built up such big debts in the first place. And then find a way to stop running them up again. Otherwise, youre likely to find yourself even worse off within a few years. Household budgeting can be very helpful, as can working with a .
Generally, its best to use a cash-out refinance to invest in your future. For example, when you want to:
With those, you stand a chance of your extra borrowing costs paying for themselves.
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Whos Eligible For A Va Cash
To be eligible for a VA cash-out refinance loan, you must:
- Live in the home youre refinancing
- Meet VA lending requirements for active-duty service in a branch of the U.S. military
- Meet your lenders requirements
- Qualify for a VA loan Certificate of Eligibility
To receive a VA cash out-refinance from a lender, youll need to provide them with a copy of your COE. Only qualifying military service members, National Guard, Reserves, and veterans are eligible for a COE.
To receive your COE, you must meet one of the following requirements:
- Served in the military for a minimum of 90 days or 181 days
- Have six creditable years of service in the National Guard or Reserves, a minimum of 90 days of non-training active-duty service , or a minimum of 90 days of active-duty service, including at least 30 consecutive days
- Be the surviving spouse of a service member who died in the line of duty, is missing in action, or being held as a prisoner of war
You may still qualify for a COE even if you dont meet the minimum service time requirements. Service members who were discharged based on hardship, service-connected disability, or other acceptable reasons may still qualify for a Certificate of Eligibility.
Reasons Veterans Get A Va Cash
Veterans use the VA cash-out refinance for plenty of reasons the biggest being that they want to convert their homes value into cash. The cash comes from home equity. So, if you have a loan amount of $200,000 and youve paid off $50,000, you can get up to $50,000 back in cash, while also potentially lowering your mortgage rate.
Veterans arent required to take out the full amount possible, though. A homeowner in the same situation could take out $10,000 to fund a small kitchen remodel, to buy a new car, or pay for a vacation, for example.
The most common reasons for a cash-out refinance is to fund remodels, renovations, and repairs to your home or to use the cash to pay off other debts.
But, there are other potential benefits to a VA cash-out refinance. Borrowers may be able to lower your interest rate and monthly mortgage payment. If you have a conventional loan with private mortgage insurance , you could remove that extra monthly cost by refinancing into a VA loan. The same is true if you have an FHA loan.
Because VA loans are backed by the Department of Veterans Affairs, they carry lots of benefits. A VA cash-out refinance can help you benefit from them.
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How Soon Can You Refinance A Va Loan
Seasoning guidelines for VA refinance loans can vary by lender. Youll typically need to have made at least six monthly payments on the loan being refinanced. In addition, the note date of the refinance loan will usually need to be at least 210 days or more after the date the first mortgage payment was due on the loan being refinanced.
At Veterans United, we currently require seven monthly payments and a minimum 240-day seasoning window.
Should You Do A Va Cash
To determine whether a VA cash-out refinance loan is a good option for you, start by evaluating your existing loan. Ask yourself:
- What is the interest rate on that loan? Take a look at what youre paying for your existing loan. Then, compare that to current VA refinance rates to see how much you might be able to save.
- Are you paying mortgage insurance on the loan? If your current mortgage is a conventional or FHA loan, you might be paying for mortgage insurance. If you refinance to a VA loan, you wont have to pay for that insurance.
- What do you plan to do with the cash? Getting access to cash at a low interest rate is one of the main perks of a VA cash-out refinance, so consider your goals for those funds. These might include consolidating debt, financing home improvements or paying for tuition.
- How long do you plan to stay in your home? Refinancing isnt free, so you need to make sure youll have enough time for those lower monthly payments to add up to a payoff. Use Bankrates refinance calculator to understand how many months youll need to recoup closing costs.
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Information For Va Home Loan Borrowers During Covid
Below are some frequently asked questions for Veterans regarding the VA home loan policies related to the COVID-19 emergency:
The number one priority for anyone financially affected by COVID-19 is to ensure the health and safety of you and your family. Next, . Your mortgage company offers free, expert assistance. While you might be worried about letting your mortgage company know about your financial hardships, your mortgage company is there to help you, and it is to your advantage not to wait, but to call them as soon as possible.
If youre nervous about contacting your servicer, or if youd like our help and advice, please contact a VA loan technician at or . When contacting a VA loan technician at , please provide the name and address on the loan.
There are multiple protections on your VA-guaranteed loan if you are experiencing financial hardship due to the COVID-19 emergency. The hardship can be direct or indirect. For example, you may be directly affected because you have lost your job, or you may be indirectly affected because of childcare situations that have decreased your monthly income or increased your costs.
The moratorium on evictions ended on .
How To Apply For A Va Home Loan
After confirming eligibility for a VA loan, take the following steps to apply:
- Gather the information you need to apply for your Certificate of Eligibility . You can apply online through your lender using a WebLGY system, or by mail by downloading a VA Form 26-1880
- Submit your loan application. The lender will request a VA appraisal of the house. The lender reviews the appraisal and your credit income and decides if they accept your loan application
- Apply for your COE and contact your states regional VA loan center to start the process directly with the government, in the case of Native American Direct Loans.
Once your lender accepts your application, they’ll work with you to select a title company to close on the house.
If you have any questions that your lender cant answer, please call your VA regional loan center at . You can also watch a video on the official U.S. Dept. of Veteran Affairs YouTube page to learn more about VA home loans and how to apply.
When shopping for a VA loan lender, we recommend the following steps.
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Does The Va Offer Home Equity Loans Or Lines Of Credit
As mentioned above, the VA does not offer home equity loans or lines of credit against your house. Your option is instead to use a cash-out refinance, which replaces your loan instead of sitting alongside it.
A home equity loan, meanwhile, is a second mortgage a second loan on top of your existing mortgage. Its only possible, as the name implies, when your home as equity, or is worth more than your mortgage amount. Its not just for home-related expenses it can be used to pay off other expenses, as well.
Unlike a cash-out refinance, you dont have to take a home equity loan as a lump sum. You can also get approved for the maximum amount, but only borrow what you need, and borrow multiple times after approval. This is known as a home equity line of credit, or HELOC.
Close On The Loan To Make It Official
On your new mortgage loans closing day, youll make the transaction official by signing a big stack of documents. Proceeds from your new loan will pay off your current mortgage. Part of the money will cover closing costs or up to two discount points which lower your rate.
After all the accounts have been settled, youll receive the remaining loan proceeds as cash back via a check or an account transfer. You can use the money any way you want.
But remember: Its not free money. Youre paying it back as part of your new mortgage payment. So its best to spend it on long-term needs like home improvements or debt consolidation.
Cash Out Refinance Disadvantages:
· If interest rates have gone up since you financed your home, you will be refinancing at a higher interest rate. This is going to be a big factor in whether you decide its worth taking out the cash. Not only will your payment potentially go way up, the cost of the loan will be much more expensive.
· You may be dragging out the repayment of your house. As you make your monthly mortgage payments, your equity naturally increases as your principal balance goes down. At the time of refinancing, you may be 15 years into your 30-year loan. If you refinance for a lower interest rate and take cash out on top, you start over at the beginning of the loan term. Instead of having your home paid off by the time youre 60, youll be paying your mortgage until the age of 75.
· You run the risk of giving into the temptation to use your house as an easy source of cash. Especially with your military status allowing you to cash out up to 100% of your homes value. You may be tempted to use the money on luxury items that are not financially sound reasons to tap into your homes equity. You can easily over-extend yourself financially, increasing the risk of losing your home if the unforeseen happens.
Education is another reason you may consider tapping into your home equity. If you want to help your child pay for college, VA refinance rates may be much lower than student loan rates, and many parents feel this is a better option than leaving their child paying student debt for years to come.