Many Veterans are weighing their VA refinance options now that rates are low and searching for information about a VA cash out refinance vs the VA IRRRL refinance program.
The VA cash out refinance loan is not as popular as it once was due mainly to falling property values, but it allows Veterans to take cash out of their home equity and use it for any purpose.
A VA cash out refinance can be obtained for up to 100% of the alue of the home plus the VA funding fee.
A VA cash out refinance doesn’t have to be paying off a VA loan – it can pay off any type of mortgage that is currently on the home. So if a home is currently financed with an FHA loan, it would be possible to do a VA cash out refinance and pay off the old FHA loan with a new VA-guaranteed loan.
It is also possible that a VA cash out refinance could be used to “catch up” on mortgage payments. So if you are behind on your FHA loan and looking for a solution, this is a possible solution: a VA cash out refinance to catch up on your mortgage payments. In situations like this, the underwriter will probably not allow a Veteran to take cash out of a property – but it will help them catch up on their mortgage and get a new one with a low interest rate.
In order to do a VA cash out refinance to pay off a mortgage that is delinquent a key element is that the Veteran is eligible for the program and must have remaining VA entitlement to get the new VA loan. If the loan that is delinquent is a VA loan on a property that is in danger of foreclosure, then the Veteran’s VA entitlement may be restored, but it certainly is not a guaranteed automatic decision.
When doing a VA cash out refinance, it must be occupied by the Veteran (unlike the VA IRRRL refinance program where the only rule is that it WAS occupied as the primary residence on the previous loan) and other rules also apply that your loan officer can help you with.
Interested in learning more about the VA cash out refinance program and whether it makes sense in your situation? Be sure to contact a VA loan expert, who will be happy to help provide you answers about your specific situation. Fill out the short form below to get matched with a VA-approved lender. It only takes a minute!