If you’re a veteran homeowner, you may be able to refinance your mortgage, save money, and get cash back with a VA cash-out refinance.
How does a VA cash-out refinance work?
A VA cash-out refinance is similar to a VA IRRRL in that it replaces your current mortgage with a new VA-backed home loan, but with one key difference: You can also take out as much as 100% of your home’s equity in cash. This can be helpful for homeowners who need money to finance significant expenses like college tuition, vehicles, home improvements, and medical fees. However, because a VA cash-out refinance provides more financial freedom than a VA IRRRL, the eligibility requirements are stricter.
What is the difference between a VA cash-out refinance and a VA IRRRL/streamline refinance?
While a VA cash-out refinance is available to any applicant who meets the necessary criteria, a VA streamline refinance is an option for homeowners who already have a VA-backed mortgage and are looking to refinance to another VA-backed mortgage. A VA streamline refinance is similar to a VA cash-out refinance, but the process is notably quicker.
Who qualifies for a VA cash-out refinance?
To qualify for a VA cash-out refinance, you must meet all of the following criteria:
- You qualify for a VA Certificate of Eligibility.
- The home you are refinancing will be your place of residence.
- You meet the income and credit requirements set by both the VA and your lender.
What are the interest rates for a VA cash-out refinance?
One of the most appealing aspects of a VA cash-out refinance is low interest rates. As of 2021, the average interest rate for a 15-year or 30-year VA cash-out refinance is between 2% and 3%, with an APR of approximately 3%.
How do I apply for a VA cash-out refinance?
If you think that a VA cash-out refinance may be right for you, you’ll need to present the following documents to apply:
- Certificate of Eligibility
- Pay stubs for the past month
- W-2 forms for the past 2 years
- Federal income tax returns for the past 2 years
Individual lenders may require additional paperwork to apply. Upon closing, you will also need to pay a VA funding fee of 2.3% for your first use and 3.6% for all subsequent uses, unless you are exempt.
If you have any further questions about a VA cash-out refinance, Cross Timbers Mortgage can help. Our owner, Chad Caplinger, is a proud veteran and Certified Veterans Lending Specialist, so you can rest assured that we have the best interests of all veterans in mind. As a thank you for your service, we’ll even provide you with $600 in credit towards appraisal costs at closing. Contact Cross Timbers Mortgage today to take the first steps in refinancing your home loan for a better future.