VA Cash Out Refinance
VA Cash Out Refinance - As a Veteran you may use your VA loan to get "cash out" of your existing VA mortgage. Keep in mind, the cash out option is NOT available through the IRRL/ Streamline refinance program. However VA has a "VA cash out refinance program" available that enables qualified veterans to receive as much as 90% of the value of your home.
Remember, the VA Cash Out Refinance is a bit more strict regarding credit, income and appraisal, plus the funding fee is a bit higher - 3% than on a VA Strealine Refinance Loan
VA Cash Out Refinance - Items to Consider
- Borrowers credit will be qualified
- Borrowers income will be qualified
- Property MUST be apraised
- Maximum LTV is 90%
- 3% funding fee - can roll into the new loan
- No late payments in the last 12 months
- You must occupy the property
VA Cash Out Example
Here'a a real example of how the numbers break down in a cash out VA refinance:
You need to put your kid through college so you'll need to take out a cash loan - so you decide to tap into the equity of your home's value to get the needed cash for the first year. You find out you qualify for a 5.5% interest rate...your original rate was 6.5% so it may be a good time to do a cash out refinance. Goal: get 25k for college and lower monthly mortgage payment
...Here's a summary of your mortgage...
You took out a loan 10 years ago at 6.5% for $150,000 on a 30 year fixed rate.
Your monthly PI ( principal and interest) is $948.
After 10 years ( 120 payments ) you OWE $127,103 on the loan, however the home now appraises for $165,000.
VA says you may borrow up to 90% of the appraised value or $148,500: $165,000 x.9= $148,500
So, the new loan will be $152,950 which is calculated as $148,500 + funding fee of 3%... the funding fee is rolled into the new loan.
The $127,103 is paid off and you pocket the difference which is $25,847 which is calculated ... $152,950 -$127,103= $25,847.
But what is the new payment? Your new interest rate is 5.5% on the $152,950 which gives you a payment of $868 a month.
So you accomplished your goal, you got the 25k for college and you saved $48 per month on your house payment!
Refinance VA loan info:
