Veterans may use VA cash-out refinance loans to turn their home equity into cash, for expenses such as college tuition, medical bills, car loans, home improvements and family emergencies. The cash-out refinance may also be used to refinance other types of home loans into a VA loan. VA cash-out refinance is a popular program among veterans, if they wish to lower the rate of VA loan, and at the same time, take leverage of their home’s equity.
How VA Cash-out Refinance Functions
The cash-out refinance allows veterans to:
1. Pay off any other type of loan they need to repay
2. Apply for a loan that is of greater value than the current loan and get the proceeds upon its closure
Note: A veteran has the liberty to opt for one or both the options.
If a veteran has a conventional or an FHA loan, but no equity to refinance the loan, he can apply for VA cash out refinancing. There are some cases when a lender allows the applicant to refinance 100% of the value of the house with a VA cash-out refinance.
Eligibility Criteria for VA Cash-out Refinance Loan
The requirements for VA cash-out are similar to VA home loan. The following members are eligible for VA Cash-Out Refinance Loan:
• Veterans with an Honorable Discharge
• Active duty service members
• Unmarried surviving spouses of veterans who are still unmarried
• Commissioned officers of Public Health and National Oceanic and Atmospheric Administration
• Current Reserve and members of National Guard
Things to Know About VA Cash-out Refinance
The VA cash-out program has the same maximum limit as the VA loan. The standard limit for VA cash-out refinance is $417,000 and the maximum limit of $721,050 in some of the high-cost counties. The limit varies depending upon the cost of living and many more factors.
It is possible to get up to 100% loan-to-value refinanced from a lender without any out-of-pocket costs. The amount of money a veteran receives depends on the current value of the home and the lender approving the loan. If an applicant currently has an FHA, USDA or any conventional loan, they are still eligible for a VA cash-out loan.
It is advisable to get in touch with a VA loan expert to clarify all the doubts related to VA cash-out loan. When an applicant has complete information about the process, it gets easier to make better financial decisions for future.