Refinancing a VA Mortgage Home Loan

types of low credit score home loans to buy a house
7 Type Of Loans To Buy A Home With Low Credit Score
November 21, 2018
Lenders of Miami FHA Loans with No Lender Overlays
Lenders of Miami FHA Loans with No Lender Overlays
November 28, 2018
Refinancing a VA Mortgage Home Loan

The VA cash out refinance program was created more than 70 years ago for veterans in the United States to provide them access to reasonable, low-cost family homes. To date, more than 22 million active and former US military personnel have benefited from this type of mortgage. With a VA cash out refinance loan, you do not need mortgage insurance or do not have to pay an advance to buy a home. 

The VA loan program is not just limited to serving the home purchaser. It also benefits an owner by proposing a VA cash refinancing possibility that allows qualified veterans to get money for any purpose by using their home equity. 

VA cash-out refinancing generally has lower rates and are easier to get an approval on compared to other mortgage types. 

VA Refinance Guidelines 

This program also does not require any type of mortgage insurance like other VA programs, all other type of loans available in the market require mortgage insurance for loans with less than 20% equity. 

This VA Cash Refinancing program is the only refinancing program available to date that allows a policyholder to receive a 100% credit value. 

For veterans, this loan may be the best way to use your own capital to achieve long-term financial goals. 

What types of VA refinance Exists? 

This type of VA loan enables the owner to get the cash by transferring the house rights.  Cash refinancing is one of the three subtypes of VA loans: 

  • VA cash-out refinance 
  • VA home buying mortgage 
  • VA streamline refinance (IRRL) 

Among them the VA cash-out is more flexible than other two options to refinance VA. It enables you to: 

  • Turn equity into money back (cash) 
  • refinancing of a non-VA loan into a VA Loan 

An existing VA loan and closing costs can easily be repaid with VA streamline refinance loan. It is large enough to enable the veterans to pay their existing debts. The veteran should already have a current VA loan. 

However, the withdrawal choice enables the veteran to open a loan of up to 100% of the worth of the house, receive money to repay other debts, get a car, make home remodeling payment or for other purposes. 

For example, a veteran or qualified owner who has $150,000 mortgage loan balance on a property worth $200,000 can refinance into a new VA Loan and get up to $50,000 at closing (minus closing costs). 

This loan is a great tool that allows veterans to quickly receive large sums of money and pay off other high interest debt and/or enact renovations or home repairs.  

Convert a non-VA loan into a VA Loan to Remove Mortgage Insurance: 

Money is not the only motive to apply for VA cash-out loan. With VA cash out loan you can refinance any type of loan and make any type of payments, even if the candidate does not plan to obtain funds at the closing. 

With VA loan veteran can:  

  • pay a non-VA loan
  • receive money at the time of closing
  • can simultaneously do both. 

In contrast, a streamline VA loan is just a VA-to-VA loan program. 

VA loans can assist the veterans by reducing their living expenses by ending an FHA-MIP contract by paying an FHA loan. Similarly, Other type of loans that requires private mortgage insurance (PMI) can also be refinanced by VA cash-out mortgages. 

For example: 

For the outstanding loan amount of $ 250,000 for a house that has been bought through an FHA loan by a veteran in 2016. The insurance cost is $175 a month. 

A veteran can utilize a VA cash out loan to refinance an FHA loan into a VA loan, even if he does not wish to withdraw extra funds. Now the veteran has a loan without mortgage insurance and, most likely, will receive a new lower interest rate. 

You can utilize VA cash out refinancing program to repay any loan that has unfavorable terms. 

  • loan with high-interest rate (an Alt-A loan) 
  • construction liens 
  • Any loan that requires mortgage insurance. 
  • Only interest rate loan or Interest-only loan 
  • Combo “piggy bank” loans of first and second mortgage 
  • Bridge loans 
  • judgements or tax liens. 
  • Stand-alone second mortgages 

In short, you can repay any loan, regardless of the category of loan. 

Limitations of VA Refinance Loans 

The limits for repaying a VA refinancing loan are identical to a VA mortgage. In 2018, the VA loan for a single-family home in most of the country is $ 453,100. In some expensive areas, the maximum credit limit of $ 679.650 is allowed. 

However, please note that VA credit limits are the only limitations that a VA does not need zero equity in a home. You can take a large loan that exceeds the specified limit. 

You can do this by holding a 25% loan that exceeds the local limit. 

For example, the limit is $ 453,100 and a veteran opens the refinance for an amount of $ 524,100. To get a loan, this veteran must have at least $ 25,000 to receive a loan. 

However, most homeowners do not need VA credits outside the local limits. According to VA 2016, the average VA refinancing loan was just under $ 250,000. 

VA Refinance Requirements 

VA refinancing loan requires documentation that is similar to a VA mortgage documentation. 

A new estimate is needed to determine the current value of your home. It is also necessary to present such documents as proof of income, for example, payment periods and W2 and any tax returns. 

Account statements may be required, as well as a detailed list of debt due loans. 

The lender checks if your income is sufficient to pay a new VA loan. 

VA lenders usually offer a debt ratio of about 41%. This means that paying for your new home as well as all other monthly loan payments (student loans or car payments, etc.) can “use” up to 41% of your gross pre-tax monthly income. 

The requirements for applying for a loan for VA cashing refinancing are more stringent. You must choose a simplified streamline VA loan if you currently have a VA loan or have no money. This simplified version of VA requires no assessment or verification of income. 

It is also necessary to determine the right to participate in military service. Acceptance depends on the length of military service and service. You can qualify if you have a service: 

  • 181 days in peacetime and are now detached. 
  • 90 days and still in active service. 
  • 90 days in the war and now separated. 
  • Two years, if they are included in the post-Vietnam-war period.  
  • if you are a surviving spouse. 
  • 6 years in the reserves or as National Guard. Or, 

Eligibility for service personnel may also be determined by other-than-dishonorable-discharge. VA certified lenders can often check eligibility in minutes with direct online VA requests. 

If you have experience in the United States Army. You must consider your eligibility for a VA loan. 

To consolidate mortgages or other debts you can use VA Refinance: 

Borrowers can withdraw money from home by obtaining first and second mortgages in the form of a low-cost VA mortgage. This is true even though current mortgages are not VA loans. 

For example, a veteran buys a house with an FHA loan and gets a second loan from a local bank. 

A qualified homeowner can repay all the loans, cancel the mortgage loan insurance and combine the two loans into one loan. 

If the money is left, the homeowner can cover the costs of medical care, take care of a family emergency, start a business or pay off a loan at a high interest rate or for any other purpose. 

VA Refinance Q&A 

Below are the most frequently asked questions about the VA cash-out Refinance program. 

Streamline refinancing is easier then Why use VA cash-out loans? 

The VA streamline does not require any valuation, bank statement, incoming payment, W2 or tax return. 

However, it is only available if 

  • You currently have a VA loan.
  • No money required for closure.

It is the only VA refinancing program that helps refinance any type of loan and stay out of equity. 

New evaluation appraisal is needed? 

Yes, you can take these loans up to the 100% of the current home value. To find out the current or new value, an appraisal is necessary. 

Is it possible to get VA cash out loan on an investment property? 

VA loans are only available on the primary residence of the borrower. 

VA refinance loan maximum loan? 

You can get a refinancing loan that is cashed at 100% of the price of the house, in addition to the cost of financing. For example, if the residence of a veteran is estimated at $ 100,000 and the borrowing rate is 2.14%, the total loan amount can be $ 102,150. 

Veterans can also include the cost of improving their energy efficiency, even if the loan amount increases in proportion to the total cost of the home. 

Are there any funding fees for a VA refinance loan? 

Yes, if you have ever used a VA mortgage loan, the cost of the loan is 3.3%. For the first time, loan fee would be approximately 2.15% of the loan amount. 

Can I get a VA loan, even if I have an FHA loan? 

Yes, a VA down payment can repay and finance any type of loan. You can use VA loan to terminate any type of loan having mortgage insurance or high-interest rate. 

I have a conventional mortgage, only interest, Alt-A or privately held loan. Can I buy a VA refinance? 

Yes, VA loan can refinance any loan. 

I need money to buy a car, a vacation, a wedding or a boat. Can I get a VA loan? 

Yes, there are no restrictions on the use of money. According to the VA Loan Guide, money can be used “for any purpose deemed acceptable by the lender.” If your lender has problems on the usage of your, try another lender. 

What is a NewDay 100 VA loan? 

NewDay 100 is a 100% VA cash out loan having 100 percent loan-to-value. This is exactly the same program that you can get from any VA approved lender that offers this type of loan for the full amount of your home. 

Is it true that Texas homeowners cannot get a VA refinance loan? 

In Texas, there are restricted property laws that limit the allocation of funds to 80% of the cost of the loan. If your loan application is rejected, this may be because you have less than 20% of the equity in your home. 

A few years ago, a lender told me that the VA program was not a good program, and I was locked into a non-VA loan program. 

The lender was wrong; He should have most likely originated a VA loan for you. Other loan programs generally have higher interest rates, require mortgage insurance and down payments, which can be cost prohibitive.  

Does a VA Refinance loans have lower interest rates than most other programs? 

Generally, yes, according to the mortgage loan software Eli May, VA rates are typically 0.25% lower than normal interest rates.  

If you have been denied a home loan or have any questions about real estate or mortgage please contact the author, Matt Herbolich, MBA, JD, LLM by phone or text at 786.390.9499 or by email at mherbolich@usa-mortgage.com. Mr Herbolich works when you work, so feel free to contact him any time. 

Matthew Herbolich
Matthew Herbolich
Mr. Herbolich is a Senior Loan Officer at USA Mortgage, #NMLS 227262. He is an expert not only in lending but multiple facets of real estate, particularly the title industry. Matt trains his fellow loan officers on title industry topics, real estate investing, and countless mortgage guidelines. Have any questions? Call at 888-900-1020 or send email to: mherbolich@usa-mortgage.com

Leave a Reply

Your email address will not be published. Required fields are marked *