VA Cash Out Home Loans Washington State

What is a VA cashout refinance?

The simple answer is any new VA loan that pays off a conventional loan or VA loan that is not a VA IRRRL (streamline refinance) is considered a VA cash out loan.  There are two types of VA cash out loans, Type 1 or Type II.

Type 1 cash-out refinance occurs when the loan amount of the new loan is less than or equal to 100 percent of the payoff amount of the loan being refinanced.

Type 2 cash-out refinance occurs when the loan amount of the new loan is greater than 100 percent of the payoff amount of the loan being refinanced.

Most VA cash out refinances fall under the Type 2 option.  The next thing that comes into play is how much of your home equity do you want to borrower.  The two levels to choose from are 90% or up to 100% of the current appraised value of the property.  Interest rates and fees are better for the below 90% option, but VA is one of the only loan products where you can borrower up to 100% of the value.  This 100% option should only be used if you are planning to be in the home for a period of time to pay down the loan incase you need to sell the property and pay the fees associated with selling your home.

You must also meet one of the following net tangible benefits when refinancing:

Net Tangible Benefit (NTB) Criteria

Elimination of Monthly Mortgage Insurance If 'PMI Included in Monthly Payment' = Yes (Checked) for the non-VA loan being refinanced then the criteria is met. If no, criteria is not met. If loan being refinanced is a VA loan, the question does not apply, so the criteria is not met.

Decreased Loan Term Compares the loan term of the loan being refinanced to the loan term of the refinancing new loan. If the loan term of the refinancing new loan is less than the loan term of the loan being refinanced then the criteria is met.

Decreased Monthly Principal and Interest Payment Compares the monthly P&I of the loan being refinanced to monthly P&I of refinancing new loan. If the monthly P&I of refinancing the new loan is less than the monthly P&I of the loan being refinanced, then the criteria is met.

Reduced Interest Rate Compares the interest rate of loan being refinanced to interest rate of the refinancing new loan. If interest rate of refinancing new loan is less than interest rate on loan being refinanced, then the criteria is met

Maintained Loan-toValue equal to or less than 90% If loan-to-value percentage of refinancing new loan is equal to or less than 90 percent, then the criteria is met.

Refinanced an Interim Construction Loan If 'Is this an interim construction loan?' = Yes on loan being refinanced, then the criteria is met.

Increased Monthly Residual Income If residual income of refinancing new loan is more than the residual income of the loan being refinanced, criteria is met

For more information on a VA cash out loan, give me a call to discuss and we can go over the pro's and con's of this type of refinance.  Kevin Tinsley NMLS ID 108542 www.vahomeloans.com or kevin@vahomeloans.com


* Specific loan program availability and requirements may vary. Please get in touch with the mortgage advisor for more information.