VA
Cash-out Refinance

A VA Cash-Out Refinance Mortgage Loan is a refinancing loan option available to veterans, service members, and eligible surviving spouses with an existing VA home loan. Unlike a VA Streamline Refinance, which is designed to lower the interest rate and monthly payment, a VA Cash-Out Refinance allows borrowers to tap into their home’s equity by refinancing their current VA loan and taking out cash for various purposes.

Cash proceeds
Borrowers can receive cash proceeds from the refinance, which can be used for various purposes, such as home improvements, paying off high-interest debts, or financing a major purchase.

Higher loan amounts
A VA Cash-Out Refinance allows borrowers to borrow up to 100% of their home’s value, which is higher than the standard loan-to-value (LTV) ratios for conventional refinance loans.

Lower interest rates
VA Cash-Out Refinance loans often offer lower interest rates compared to conventional cash-out refinance loans, which can save borrowers money over the life of the loan.

No private mortgage insurance
Unlike conventional cash-out refinance loans, VA Cash-Out Refinance loans do not require borrowers to pay PMI, which can save money in the long run.

To be eligible for a VA Cash-Out Refinance, borrowers must meet certain requirements.

– Own a home with an existing VA home loan

– Be current on mortgage payments (exceptions may be made for documented hardships)

– Occupy the property as their primary residence

– Meet VA’s cash-out refinance guidelines, which may include credit score requirements, debt-to-income ratios, and appraisal requirements

VA Cash-Out Refinance loans have some limitations and considerations.

Closing costs
While VA Cash-Out Refinance loans do not require PMI, they do come with closing costs, which can add up to thousands of dollars.

Loan terms
VA Cash-Out Refinance loans typically have fixed interest rates and loan terms, which can be longer than the original VA loan term, up to 30 years. 

Appraisal requirements
VA Cash-Out Refinance loans require an appraisal to ensure the property’s value has not decreased since the original VA loan.

The VA Cash-Out Refinance Mortgage Loan is an option for eligible veterans and service members who want to tap into their home’s equity while taking advantage of lower interest rates and no PMI requirements.  However, it’s essential to carefully consider the potential benefits and drawbacks, as well as your financial goals and needs, before deciding to pursue this type of refinance.