The VA IRRRL is an extremely popular and helpful option. However, there are two major features the VA cash-out refinance has that the IRRRL doesn’t. One, the VA cash-out refinance gives you extra cash on top of your mortgage. That money can be used for virtually any reason: paying off other debts, covering tuition, or even going on a much-needed vacation. And two, you can refinance with the cash-out even if you don’t already have a VA loan. So how do you begin? Take a look at these VA cash-out refinance guidelines.
Qualifications and VA Cash-Out Refinance Guidelines
In order to qualify for the VA cash-out, you must first meet VA eligibility requirements, income requirements, credit score minimums, and property evaluations.
- With VA eligibility, you must request a COE (Certificate of Eligibility), which your lender can help you obtain. COE guidelines depend primarily on the amount of time that you served in the military and your discharge type (it must be anything other than dishonorable). COEs are also available in some cases for surviving spouses who have not remarried.
- Proof of income or employment is required for the VA cash-out refinance and is usually verified through pay stubs from the last 30 days.
- Minimum credit score requirements vary from lender to lender with most requiring a credit score of 640 or higher. However, the Department of Veterans Affairs itself does not set any limits. At Low VA Rates, we normally follow this same standard.
- With the VA cash-out refinance loan, your lender will order a property appraisal, which will determine the value of your house and property. This will also determine the amount of your loan. The cash-out VA refinance allows you to finance up to 100% of the property value (minus any closing costs you want to roll into the loan). Though you can definitely borrow less than this amount for whatever fits your needs.
Making the Decision and Applying
Is the VA cash-out refinance right for you? Like with any loan option, there are a few drawbacks that should be taken into account along with all of the advantages. First, know that the funding fee will be slightly higher than if you were to refinance with a VA streamline, and other fees may be slightly higher as well. The best course of action when determining whether the cash-out is the best option for you is speaking directly with one of our loan officers. They will be able to guide you on the best financial decisions for your home. To learn more or apply today, visit our site.