One type of VA loan is the VA cash out refinance. These loans allow you to withdraw equity from the property in the form of cash. The cash can be used for any purpose.
You can also use a VA cash out loan to refinance an existing non-VA loan into a VA mortgage. This may be a great option if you are an eligible Veteran with an FHA loan. You may be able to eliminate your monthly mortgage insurance costs.
Learn more about VA cash-out mortgages:
- Full VA Cash-Out Guidelines
- VA Cash-Out Refinance Benefits
- Remove Mortgage Insurance with a VA Cash-Out Loan
- VA Cash-Out Q&A
Unlike VA streamline refinance loans, VA cash out loans are “fully documented” mortgage programs requiring the borrower to provide evidence of income, employment, good credit and necessary liquid assets in the same manner when the original VA loan was used to purchase the property.
The VA cash out refinance loan pays off the existing VA loan, rolls in required closing costs associated with the mortgage while providing cash proceeds directly to the borrower.
For example, let’s imagine your existing VA loan has a balance of $200,000 and the closing costs on your new loan are $3,000. You borrow $250,000 while refinancing to a lower interest rate.
The result is a new loan amount of $250,000 and cash proceeds to you of $47,000.
Of course, an appraisal is required and you’ll need to have adequate equity in your home. If you are interested in seeing whether you can cash out the equity in your home using a VA cash out loan, complete our no obligation free quote request to speak to a licensed VA lender.