In addition to the VA streamline refinance program, also known as IRRRL, the VA offers a VA cash-out refinance for homeowners who want to take home equity out as cash. These funds can be used to pay off debt, make home improvements, pay for school, etc. While the VA IRRRLcan be used only for existing VA loans, the VA Cash Out refinance can be obtained to refinance a non VA loan (conventional, FHA, USDA, etc.) into a VA loan as long as the borrower is eligible. If the borrower has a non VA loan and wishes to refinance into a VA loan with no cash proceeds this is still considered a VA Cash Out. The VA Cash Out refinance is a VA guaranteed loan that is similar to a VA home purchase mortgage.
General requirements for a VA cash out refinance are as follows:
– Eligible borrowers are Veterans, Reserve and National Guard members, active duty service members, certain surviving spouses and other specific groups that are eligible for VA home purchase loans.
– A Certificate of Eligibility (COE) is necessary for the VA cash out refinance.
– The VA cash out refinance requires an appraisal, credit underwriting and normal income verification. Regular documentation is also necessary.
– The refinance must pay off the existing lien.
– The borrower can receive cash proceeds from the loan for an acceptable purpose which is approved by the lender.
– Itemization of the debts to be paid off by the loan proceeds is required.
– The eligible borrower must own and occupy the propertyas their primary residence.
– A termite , well/private water system and or sewer inspection may be required depending on the region and local VA requirements.
Benefits of a VA Cash Out Refinance
– A VA cash out refinance can be used to refinance any other type of loan to the VA program.
– The VA cash out refinance can equal 100% of the Notice of Value, depending on the lender, plus the funding fee plus the cost of energy efficient improvements up to $6,000.
– Other debt can be paid off so that the borrower has one loan with one monthly payment that can be spread over a longer period of time (term).
– The refinance may have a lower mortgage rate than the existing debt that is paid off.
– As with all VA loans, the VA cash out refinance does not require private mortgage insurance.
– Depending on the lender, interest rates can be lower than FHA or Conventional loan programs.
With the improvement in housing market conditions and availability of credit, many lenders, including VeteranHomeFinancing.com, are offering 100% VA cash out refinances for debt consolidation or cash in hand to be used for other purposes. This is well above the cash out refinance for conventional loans which allows up to 80% with higher mortgage rates and FHA refinances which allows 85%.
VA loans have once again proved to be today’s best mortgage program with the VA cash out refinance which allows better access to home equity than any other loan program even if the eligible borrower has a different type of loan.
Feel free at any time to contact me for more information about the VA Streamline Refinance – IRRRL and you can benefit from refinancing.
My loan process was very easy and quick. Not to mention a great loan rate. I couldn't be happier!
Capt Sam T. - US Army
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