If you’re eligible as a service member or veteran, you may have the option to refinance your current mortgage and borrow cash from your home through one of the most affordable mortgage programs available.
The VA cash-out loan provides money-saving opportunities because it is backed by the U.S. Department of Veterans Affairs to support service members and their families.
You may be interested in a VA cash-out refinance if you would like to take cash out of your home’s equity to use for other expenses. Maybe, you would like to work on some home improvements to modernize your house or give it a more curb appeal. Or perhaps you would like to pay off other debts, such as student loans, medical bills, or credit cards, to lessen the burden of bills. Either way, VA loan benefits can be quite helpful to simplify your expenses.
Learn more about what the benefits are, how you can use them and the requirements for a VA cash-out refinance.
What are the VA cash-out refinance benefits?
As a qualified veteran, active service member, or otherwise eligible person, you can refinance your home regardless of whether your current mortgage is a VA loan, FHA loan, or even a conventional loan.
This refinancing program allows you to take cash from your home’s equity, while also potentially lessening your current mortgage rate. Additional benefits include the following:
- Borrowing up to 100% of the equity from your home
- Paying off high-interest debts
- Getting approved for a lower mortgage rate
- Having lower closing costs
- Getting rid of your mortgage insurance
What are the VA loan cash-out requirements to borrow cash from my home?
As a homeowner, you have experienced the process of buying a home and the paperwork required. When you apply for a VA loan cash-out refinance, you will go through a similar process and show the same paperwork you did when you purchased your current home.
Paperwork you will typically need to show includes the following:
- Income documentation, such as pay stubs for the most recent 30-day period
- W-2s and tax returns for the past two years
- Bank statements
- Credit report and credit score
- A new home appraisal
If your reason for getting a cash-out refinance loan is for debt consolidation, then you may also need to create an itemized list of debts that will be paid off.
A Certificate of Eligibility, or COE, will also be needed to show that you are eligible for a VA loan. You will have already obtained one of these if your current home loan is a VA loan. If your existing loan is not a VA loan, but you think you may be eligible for VA benefits, getting a COE will be one of your first steps.
What can I use my VA loan cash-out benefits for?
There are many reasons why you may want to refinance your current loan and choose a VA cash-out refinance mortgage.
Often the cash received will be used to help pay off other bills or expenses. You may have many medical bills that need to be paid, student loans, or credit card bills with high-interest rates. Paying off these expenses can make it easier for you to make your mortgage payments and help you save money over the lifetime of your mortgage.
While receiving cash from your home’s equity is one of the most common reasons for getting this loan, it is not the only VA loan benefit. There are more benefits to refinancing than just receiving cash at closing.
If you have an FHA loan or conventional loan, you may want to use a VA cash-out loan to pay off your non-VA loan. Depending on the amount you owe on your current home loan, you may even have enough equity to pay off your existing home loan and still receive cash at closing.
If you have a non-VA loan, one of the greatest benefits of refinancing over to a VA loan is that you will be able to get rid of your mortgage insurance, and in some cases it can even be refunded to you. Your monthly payments will be reduced when your PMI or MIP is canceled.
Should you use benefits to borrow cash from your home?
While the name can be misleading, a VA cash-out refinance can provide many money-saving benefits beyond borrowing from your home’s equity.
If you are interested in learning whether a VA cash-out refinance loan is right for you, speak with a Homefinity lender about your options and the benefits you can receive. Reach out to us so that we can help you get started.
VA loans subject to individual VA Entitlement amounts and eligibility, qualifying factors such as income and credit guidelines, and property limits. Homefinity is not affiliated with any government agencies. These materials are not from VA, HUD or FHA, and were not approved by VA, HUD or FHA, or any other government agency.