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What is the VA Cash-Out Refinance?
A VA Cash-Out Refinance allows a veteran or active duty service member to tap into the equity in their home and pull out cash to use at their disposal. There are a number of reasons why one would use a cash-out refinance, including paying off debt, upgrades or renovations to your home, emergencies, or simply pulling out cash for other ventures.
What are the benefits of a VA Cash-Out Refinance?
- Get cash from the equity in your home to use for other big purchases
- You still get the same great VA Loan benefits
- There is no private mortgage insurance (PMI)
- You don’t need to be in a current VA Loan (you just need to be eligible to receive a COE)
When Can I Use a VA Cash-Out Refinance?
In order to be qualified to use a cash-out refinance, the equity in your home must be equal-to or greater-than the amount of money you wish to pull out or use, plus the costs associated with facilitating the refinance, known as closing costs.
You do not have to be in a current VA Loan to take advantage of the VA cash-out refinance, but you do need to be eligible to receive a COE. This new loan will then replace your existing mortgage and can represent up to 100% of the property’s value.
What is the Funding Fee for the VA Cash-Out Refinance?
The VA Cash-Out Refinance is subject to a funding fee which is added to the total loan. These fees are paid to the Department of Veterans Affairs and are collected in order to offset the bank or lender's losses if you were to default on your mortgage. These funding fees are the same as traditional VA Loans and are set at 2.3% for first time users and 3.6% for subsequent use. Exceptions are made when a veteran has 10% or greater disability or an active duty member has been awarded the purple heart.LEARN MORE
Do I Need To Get Inspections?
Depending on the length of time from when you first bought your home to when you are trying to use a cash-out refinance, you will likely be required to order a termite inspection as well as an appraisal just like when you originally bought the house.