VA Cash-Out Refinancing Loans

Cash-Out Refinancing on VA Loans

There are certain instances in veterans’ lives when an influx of cash can come in handy. Perhaps their children are going off to college and they need money to pay for college tuition. Maybe they want to remodel or aesthetically improve their home, or have finally decided to take that vacation and travel the way they want to. Regardless of the reason, a VA Cash-out Refinancing Loan allows veterans and VA Loan recipients access to a lump sum of cash.

With Cash-out Refinancing Loans, the homeowner gets cash from the equity of the home. Previously, cash-out loans used to be limited to 90% of the value of the home determined by the appraiser. Nowadays, however, veterans are able to receive VA Cash-Out Refinance Loans for the full 100% value.

Why Take Out a Cash-Out Refinance Loan?

With a Cash-Out Refinance Loan, you can use your home as a financial tool when you need to. You can get a much larger cash flow each month without a dramatic increase in your mortgage payment. In addition, you can also take out your equity for investment purposes. Because investments are rarely (if ever) 100% guaranteed, however, we highly recommend speaking with a certified financial planner before taking out a VA Cash-Out Refinance Loan for investing.

Many veterans also take out VA Cash-Out Refinance Loans to:

• pay college tuition for their children
• remodel their home
• take the vacation they've always dreamed of, or;
• take care of any other reasons they may require a lump sum of cash

Can I get Cash-Out Refinancing?

The VA needs an appraisal of your home and a 3% funding fee before you can qualify for cash-out refinancing. In many cases, the funding fee is rolled into the loan or waived altogether. The VA requires the appraisal to show equity in your home. The length of time you have had your existing VA loan doesn’t play a factor in determining eligibility for cash-out refinancing.

In most instances, as long as you have your payment history is good and you haven’t had any charges for delinquent payments in the last twelve months, your Cash-out Refinance Loan will be approved. However, the cash-out refinance process is stricter than that of your initial VA Loan, so the wait time may be longer.

How Much Equity Do I Need?

There is no set minimum on the amount of equity you hold in your home before you can get a VA Cash-Out Refinancing Loan. That being said, you should probably do due diligence to make sure the process will be worthwhile and you have sufficient equity before having to incur the fees.

As VA Loan experts, we have a lot of experience determining which VA Loan is best for each individual veteran. We are more than happy to advise you on whether a VA Cash-Out Refinancing Loan will best suit your needs, or if you would be better off going with a VA Streamline Refinance Loan or some other option.

Cash-Out Refinancing vs. Streamline Refinancing

• Cash-out refinancing offers actual cash to borrowers, whereas streamline refinance VA Loans renegotiate the terms the previous loan and incorporate them into the new loan, but do not offer actual cash payouts
• VA Cash-out Refinancing Loans are primarily used for college payments, debt consolidation or emergencies, while Streamline Refinance Loans are for reducing interest rates and lowering monthly payments