VA Cash Out Refinance Guidelines for 2017

There�s no doubt the VA home loan is one of the veteran�s most valuable benefits. Being eligible for a VA home loan means getting a mortgage that doesn�t require a down payment while still offering competitive interest rates. That means coming to the closing table with as little money as possible when buying a home and financing the purchase with a VA loan. Yet the VA home loan also has benefits when the veteran decides to refinance. How so?

When the veteran decides to refinance an existing VA loan, there are two distinct choices- a VA streamline refinance or a cash-out refinance. A streamline refinance doesn�t require a credit score. Nor does the streamline verify employment or income or even a property appraisal. As long as the veteran is refinancing to a lower rate or refinancing out of a variable rate loan into a fixed, the streamline is an option. However, what cannot occur during a streamline is pulling out additional cash in the process. To tap into the equity of the home while at the same time refinancing to a lower rate or changing from a variable to a fixed, the cash out loan is the option, not the streamline. Streamlines do not allow for extra cash to the borrowers at the closing table.

VA guidelines allow for borrowers to refinance up to 100% of the current value of the property and pull out additional cash. Note however that just because it�s okay with the VA individual lenders may place a cap on the amount of cash pulled out or limit the loan amount compared to the appraised value. A VA cash out loan must also document the application in very much the same fashion as when the home was originally purchased. Buyers can expect to provide documentation regarding income and assets, employment and credit. An appraisal will also be ordered to establish current market value.

Say a couple decides to refinance their existing VA loan. The current loan balance is $150,000 and the appraised value is $200,000. They go to their closing, sign the papers and the old loan is paid off completely and replacing it with a new loan. They pocket the net proceeds from the new loan after closing costs are paid. If you�re considering refinancing your VA loan and there is additional equity the property, a cash out loan is an option and the proceeds can be used in any way you want.

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