The Complete Guide To The VA Cashout Refinance Loan

Mortgage rates are hitting new record lows. If you are a veteran, now may be a good time to get a VA Cashout Refinance loan. In this post, I’ll tell you all about what this loan is and how it works.

Before you pull cash out, put your numbers into my VA cash-out savings calculator to see what consolidating the debt actually saves you each month once the new rate and the funding fee are included.

If your goal is a lower rate rather than cash, compare it against an IRRRL first: my VA IRRRL recoup calculator shows whether the fees recoup inside the 36 months the VA requires.

Note: If you just want to just pay off an existing VA Mortgage loan and get a better rate without taking cash out, check out the IRRRL post instead.

There is also a bill in Congress that would raise the IRRRL funding fee. Here is what that proposal would do to VA refinances.

The VA Cashout Refinance loan is a mortgage program that allows you to take cash out from your home’s equity. You can borrow up to 100% of the property value if certain requirements are met.

You can use the funds for anything you wish when borrowing at 90% of the property value. Some of the common uses include:

• Getting a lower rate
• Converting a conventional loan to VA
• Home improvement projects
• Paying off high interest credit cards and personal loans
• Paying for a wedding
• Paying for a dream vacation
• Buying a car

Net Tangible Benefit Test

In certain cases, the VA allows you to borrow as much as 100% of the property value but the proposed new VA Mortgage loan must pass a “net tangible benefit” test . 

To pass the net tangible benefit test for 100% financing, the proposed new VA Mortgage loan needs to meet one of the following:

• The new VA loan eliminates monthly mortgage insurance
• The term on the new loan is shorter than the loan being refinanced
• Bills are being consolidated, which increases your total cashflow
• The new VA loan replaces an interim loan to construct, alter or repair the home
• The new VA loan refinances an adjustable rate loan to a fixed rate loan

If none of the above benefits are realized in the new VA Mortgage loan, cash out is still an option, but keep in mind that you are limited to 90% of the property value. For 90% cash out VA Mortgages, there are no limitations to what can be done with the funds.

Funding Fee

You will need to pay the funding fee (typically the subsequent use rate of 3.3%). If you are exempt from the funding fee due to service related disabilities, then the funding fee will also not be due on the refinance.

Funding fee rates, exemptions and refund rules are covered in detail in my VA funding fee guide.

Keep in mind that the funding fee is taken out of the available funds for the refinance. For example, if you are refinancing a home that appraised for $100,000, the funding fee of $3300 (3.3%) would be taken out, and then the remaining $96,700 would be available for whatever else is needed.

Why Use Me For Your VA Cashout Refinance Loan

You have a lot of choices when deciding which loan officer to use for your IRRRL mortgage loan. If you are in Ohio or Kentucky, here are a few reasons you should consider me to be your mortgage loan officer for your VA Cashout Refinance.

• VA Mortgage Loans are my specialty. 
• I am a Certified Loan Officer with Military Mortgage Bootcamp. Less than 1% of loan officers in the USA have this certification.
• My Branch Manager, Michael Fischer, is the founder of Military Mortgage Bootcamp so you can be assured that we will take good care of you.
• My employer, Edge Home Finance, LLC, is very VA friendly, including on VA loans.
• I can structure the IRRRL refinance so there are little to no out of pocket fees to you.
• I work with veteran friendly title companies to lower the title fees. This is by far the greatest expense when doing an IRRRL.
•  If you qualify, I can help you get the homestead exemption and lower your property taxes.
• I am a trusted advisor. I work in your best interests not the other way around.
• I am available by phone or text. Call me when you need me at 937-572-3713.

Conclusion

The VA Cashout Refinance is a great way for veterans to take advantage of their home equity to pay off some bills and live a better life. If you have any questions about this program, do not hesitate to reach out to me at 937-572-3713.

If you have a service-connected disability rating, do not overlook the property tax side either. My Disabled Veteran Property Tax Exemption Guide covers what each state takes off the bill and how to claim it.