VA Cash Out Refinance: A Great OptionMax McCoy
An existing VA mortgage, just like any other mortgage, can be refinanced. With a VA Cash Out Refinance, you can refinance your mortgage for more than you currently owe, then pocket the difference.
Say you owe $50,000 on $120,000 house and want a lower interest rate. You also could use $20,000 cash to spend for that new car you need. You can refinance the mortgage for $70,000. You can likely get a better rate on the $50,000 that you owe on the house and you get a check for $20,000 to spend as you wish.
Cash-Out Refinancing is Special
Cash-out refinancing is very different from a traditional home equity loan. Here’s why:
- A home equity loan is a separate loan on top of your first mortgage.
- A cash-out refinance is a replacement of your first mortgage.
- The interest rates on a cash-out refinancing are usually, but not always, lower than the interest rate on a home equity loan.
- You pay closing costs when you refinance your mortgage.
- Generally, you don’t pay closing costs for a home equity loan.
- Closing costs can amount to hundreds or thousands of dollars.
Basic VA Cash Out Refinance Qualifications and Requirements
- Current Reserve and members of the National Guard
- Active duty service members
- Veterans with an Honorable Discharge (veterans of the Reserve and National Guard)
- Unmarried surviving spouses
- Commissioned officers of the Public Health and National Oceanic and Atmospheric Administration
- Veterans that have been discharged under conditions other than dishonorable
In addition, VA cash out loan applicants will submit a Certificate of Eligibility (COE) which the lender can obtain for you fairly quickly.