In this blog, we will discuss and cover VA cash-out refinance mortgage guidelines. As we have discussed in detail recently, the VA loan program is the best option for veterans of the United States Military to purchase a home with minimal guidelines and little if any money out of pocket. As of this writing, there have been over 22 million loans closed using the VA Loan program which includes current military members and also qualified former members of the military that have their COE or Certificate of Eligibility.
Now there is a loan option under VA loans that we are going to discuss today that does not get the attention it deserves. It is the VA Cash-Out Refinance. Just like other cash-out refinance options, the VA option is no different and allows veterans to tap into the equity in their homes when they need to.
As previously mentioned, the VA Cash-Out Refinance is just like other cash-out refinance options except it is a loan under the VA umbrella of loans. You are still required to be a veteran of the military and with proper eligibility requirements like standard purchase loans. The VA Cash-Out Refinance is 1 of 3 loans offered by the VA. The others are a VA loan purchase and a VA streamline refinance (also known as an IRRRL or Interest Rate Reduction Refinancing Loan).
With the VA Cash-Out Refinance, you are able to receive cash out of up to 100% LTV upon closing the loan from your equity. You are able to refinance a non-VA loan. This is one great requirement as you do not need a VA loan to cash out but can have an FHA or Conventional Loan as well and refinance with no problem.
With a VA Cash-Out Refinance, you are able to borrow up to 100% loan to value of the home’s value and receive the proceeds minus applicable closing costs. For example, if you have a home worth $250,000 and you owe $175,000 on it, you are able to cash out $75,000 minus any closing costs associated with this loan.
Another positive associated with the VA Cash-Out Refinance is the removal of mortgage insurance or the refinancing out of high-priced loans. If you currently don’t have a VA loan and you qualify for one, you should be refinancing and taking advantage of today’s historic mortgage rates. VA loans do not require mortgage insurance premiums. Mortgage insurance is standard and mandatory on FHA loans and Conventional loans with under 80% LTV.
If you currently have an FHA loan for $300,000, your MIP or mortgage insurance premium would be $213 per month, so why would you keep your FHA Loan? Another benefit of using the VA Cash-Out Refinance is to get yourself out of the high-priced loans that are out there. There are plenty of these alternative loans out there and you can refinance the following:
The requirements needed for a VA Cash-Out Refinance are similar to those needed for a VA purchase loan. The main items you will need are a new appraisal of your home to support the value and cash-out amount you are wanting, current paystubs, W2s, tax returns, etc. If you don’t want to deal with all the paperwork and you already have a VA Loan, you may want to choose a VA Streamline Refinance as an appraisal and income documentation is not a requirement. As with all VA Loans, making sure you are eligible is key to even seeing if you can get approved.
To be eligible you will need to have one of the following: Served 90 days during wartime, served 90 days and still on active duty, served 181 days during peacetime, served 6 years in National Guard or Reserves, or a surviving spouse. If you have made sure you are eligible for a loan, then the next thing you should know is there are no maximum VA Loan Limits, unlike other loan programs.
If you are a veteran and are currently not using your VA Loan or you would like to perform a 2017 VA Cash-Out Refinance, then you need to contact us today at Loan Consultants, call us at Loan Consultants at 844-275-2007. Text us for a faster response. We love nothing more than helping veterans of the military become homeowners. The team at Loan Consultants helps veterans in any way that we can.
The VA Loan program is the most lenient option around, so if you have your COE or Certificate of Eligibility then you need to hurry and call today as you could be wasting money on a monthly basis having a loan you are paying mortgage insurance on as well as a higher mortgage rate. Let’s get you in the right loan and a loan you deserve and have earned.
The Department of Veteran Affairs has a great program in place to help out Veterans and there really is no excuse not to get into a great loan program for you. We have lenders that will get you approved with credit scores down to 500 FICO with no maximum cap on debt to income ratio.
The housing market is hot. With the exception of a few states, many homeowners who purchased their home a few years ago are enjoying their home values rise. Many homeowners have homes that have appreciated more than double-digits. Some have homes that appreciated in value by 30% to 40% or more. It seems that lower-taxed states are the areas where homeowners are enjoying the hefty gain in their home equity. Other states like Illinois, New York, New Jersey, California have seen a substantial drop in home prices and an increase in property taxes.
VA loans are the only loan program that allows up to 100% LTV on cash-out refinance mortgage loans. FHA loans have lowered the loan to value from 85% LTV to 80% due to the skyrocketing costs of home prices. Due to the sudden appreciation of home prices nationwide, HUD Updated Cash-Out Refinance Guidelines by lowering the current 85% LTV to 80% LTV on cash-out refinances. The main fear HUD has along with other federal mortgage agencies is a potential of a housing correction and/or crash. In the following paragraphs, we will cover and discuss Updated Cash-Out Refinance Guidelines the various mortgage loan programs.
There are many benefits to doing cash-out refinancing for homeowners. Most loan programs offer cash-out refinancing The key to getting cash by refinancing is homeowners must have equity. HUD was the most in loan to value caps of 85% LTV until the recent changes on the HUD Updated Cash-Out Refinance Guidelines where HUD lowered them to 80% LTV. Proceeds taken out on a cash-out refinance are tax-free. Proceeds are not taxed by the Internal Revenue Service.
Homeowners can use the proceeds for any purpose they like. It can be paid to pay down credit card balances, pay off a car loan, investments, home renovations, weddings, or vacations. It can also be used to pay down and/or off a second mortgage and/or HELOC. Cash-Out Refinances are one of the most popular loan programs at Loan Consultants. The average balance on a credit card debt is $6,506 and the average credit card interest rate is at 18.98%.
Monthly payments can add up. Paying the minimum monthly credit card payment due will hardly make a dent in reducing your credit card debt. Average auto payments are $400. However, if you take $50,000 cash against the equity of your home, the extra mortgage. payment on a $50,000 additional mortgage balance is $250 per month. With the $50,000 cash proceeds, you can pay off most of your debts including your auto loan. The amount of proceeds you can get depends on the equity you have in your home. HUD Updated Cash-Out Refinance Guidelines allow up to 80% loan to value.
Mortgagee Letter 2019-11 for FHA Case Numbers assigned on and/or after September 1st, 2019 will need to abide by the new guidelines. The bottom line is HUD now requires the maximum loan to value to be no greater than 80% on FHA Cash-Out Refinance Mortgages. The new guideline is a reduction from the old 85% LTV cap. HUD is not the only loan program that has reduced the loan to value on cash-out refinances.
The Department of Veterans Affairs has recently announced that the loan to value cash-out refinances on VA loans will be reduced from 100% to 90% LTV. However, Loan Consultants still offers veteran homeowners up to a 100% LTV on VA cash-out refinance mortgages. As mentioned earlier, federal agencies are getting afraid of a potential housing market correction.
Mortgage Agencies do not want to see a repeat of the 2008 Real Estate and Mortgage Crisis. Fannie Mae and Freddie Mac have 80% LTV loan caps on cash-out refinances and so do Jumbo Mortgages. Non-QM Loans can go up to 90% LTV. For more information about this article and/or other mortgage-related topics, please contact us at Loan Consultants at 844-275-2007 or text us for a faster response. Loan Consultants are still offering VA cash-out refinance loans up to 100% loan to value.