VA Cash-Out Refinance Loan

How long you have to wait to get a VA cash-out refinance varies by lender. Typically, lenders will make you wait 210 days or more after you make your first original mortgage payment. However, it will vary from lender to lender, so you should speak with them directly if you’re considering this refinancing option.

If you’re wondering if a cash-out refinance loan is right for you, we recommend speaking with your lender to determine when you can apply.

We recommend gathering all your loan documents before applying to help streamline the process, which includes your Certificate of Eligibility (COE) and income documentation like W-2s, pay stubs, and tax returns.

While you use a VA loan to purchase a home, there are no limits on how to use the cash you receive when you refinance your VA loan. Many borrowers use these loans for:

• Home improvements
• Emergency expenses
• Education expenses
• Debt consolidation

They’re essentially personal loans but with generally lower interest rates, which can allow you to save money in the long run.

Typically, the maximum loan term for a refinance VA loan is the original term plus ten years. However, loan terms do not exceed 30 years. If your original VA loan term was 15 years, you might have 25 years or more to pay off your cash-out refinance loan.

The VA loan funding fee doesn’t vary based on a minimum credit score requirement like the interest rate. Instead, the VA funding fee for a cash-out refinance is 2.15% for a first-time borrower and 3.3% for subsequent use.

However, the VA funding fee is only 0.5% if you take out a VA streamline refinance. You’ll pay a funding fee of 1.25% to 3.3% for second and subsequent mortgages depending on if you are purchasing a new home or doing a cash-out refinance.

Yes, you can get a VA cash-out refinance even if your original mortgage isn’t a VA loan. In this case, you would essentially be replacing whatever type of mortgage you currently have with a VA loan. 

In order to do this, though, you must meet the minimum VA loan requirements and have a valid Certificate of Eligibility (COE). Additionally, you’ll have to work with a VA-approved lender and pay the VA funding fee at closing (unless you’re exempt).

Unfortunately, free and clear properties are not eligible for VA cash-out refinance loans. In order to get a VA cash-out refinance, you need to have an active loan on the property in question. Thus, you will not be able to complete a VA cash-out refinance if you have already paid off your mortgage in its entirety.

Keep in mind that if you do own your property outright and want to cash in on your equity, you can still apply for a home equity loan (HELOAN), a home equity line of credit (HELOC), or even a standard cash-out refinance.

VA refinance rates vary based on the lender you work with and current market conditions. The VA loan refinance rate you qualify for will also depend on your specific financial profile and things like your credit score, DTI ratio, loan amount, and more.

At Griffin Funding, we are very experienced when it comes to dealing with VA loans and offer competitive VA refinance rates for veterans and service members who want to capitalize on their home appreciation through a VA cash-out refinance. Contact us today or fill out an application to lock in your interest rate.

While there are several benefits associated with VA cash-out refinance loans, there are some potential drawbacks to consider as well. Some of the primary cons of a VA cash-out refinance include:

• Getting a VA cash-out refinance will lead to you owing more on your mortgage, increasing your debt burden and lowering your home equity.
• Borrowers will have to pay closing costs and the VA funding fee in order to get a VA cash-out refinance loan.

A VA cash-out loan is ultimately determined by your financial situation. While refinancing is often beneficial to those who have improved their credit and overall financial health since applying for their original mortgage, it may be unfavorable for those who have not. For example, if your credit is worse off, a VA home refinance could increase your interest rate and mortgage payment.

VA cash-out finance loans are designed for VA loan borrowers who want to tap into their home’s equity and receive a lump sum, which is the difference between the new loan amount and how much they owe on their mortgage.

These loans are an alternative to a second mortgage and can be a better option for individuals who want to avoid paying two mortgages each month. Any VA loan borrower, whether you have a traditional VA loan or jumbo loan, can qualify for a cash-out refinance VA loan as long as you meet the refinance guidelines.

VA cash-out refinance loans are available for borrowers who don’t already have a VA loan. With this loan, you can refinance another type of loan into a VA loan, but that means paying VA loan closing costs.

A VA streamline refinance is another type of refinance loan that replaces your original mortgage loan. However, you can’t refinance with a VA streamline refinance if you don’t already have a VA loan. These loans are designed for different types of borrowers.

For instance, a VA cash-out refinance loan is designed to leverage the equity in your home, giving you a lump sum you can use for anything from paying off debts to making home improvements.

On the other hand, a VA streamline refinance is best suited for borrowers who want to change the terms of their current VA loan. For instance, they can reduce your interest rates, which will reduce your monthly payments, or change your repayment terms.

For VA loans of any kind, there is no standard maximum loan amount. Instead, the Department of Veterans Affairs limits the amount of the loan it will guarantee, which is 25% of the total home loan. Typically, lenders will set loan limits in compliance with Fannie Mae or Freddie Mac. However, those with homes in places that have a higher cost of living may be approved for a larger loan.

In some cases, borrowers may be able to refinance their loan up to 100% of their home’s value with Griffin Funding, however most VA cash-out loans go up to 90%, leaving 10% equity in the home.

Since the amount of mortgage debt you need to refinance affects how much cash you’ll receive to repay your debts and meet other needs, you should keep in mind that including the VA funding fee in the loan can reduce how much you get back.