VA Cash Out Refinance Loans
Capital Bank is a national lender with expertise in VA Loans – so you feel like you are speaking to your local expert.
Do you own your home? If you are like many people and have a mortgage on your property, you may joke that it’s you and the bank who share the ownership. Still, you feel pride of ownership, along with the confidence that the equity you are building in your home will be there when you need it. Though the upheavals of the housing market over the last few years have changed the situation a bit, most homeowners still feel that their home has cash value that they can tap into in an emergency.
Cash In Hand
A cash out refinance loan allows you to do just that. This popular VA loan allows you to refinance your property at current low interest rates and also take out cash — up to 100% of the appraised value of the house in some areas. This means that if the house you bought for $125,000 appraises for $175,000 due to the market and any improvements you have added to it, you might be able to obtain a new mortgage at lower interest rates for $175,000 and receive back up to $50,000 in cash. However, your closing costs and the VA loan fee will reduce this amount somewhat.
Though you cannot get a VA cash out refinance loan for a “frivolous” purpose, you can obtain one to pay off debt, remodel your house, pay college tuition, or any other “good” reason. You should think about this carefully as you might not want to be paying credit card bills for 30 years, but having lower payments as a result of a lower interest rate might make this a good trade-off.
Three Common Uses For Cash Out Refinance Loans
- A VA cash out refinance loan also helps people in three other frequent situations. First, if you bought your house with an adjustable rate mortgage (ARM), you might want to finance at a low fixed rate. Over the last couple of years, some adjustable-rate mortgages have been a good deal since rates are low. As interest rates rise as they are bound to do, you could soon be at the mercy of the market once again with a higher interest rate and higher payment. Your VA cash out refinance loan can help you secure your home at a stable fixed rate.
- Second, you may also need to refinance other loans that seemed like a good idea at the time you took them out, such as piggyback mortgages, interest-only mortgages, or other loan products. These can leave you with a balloon payment you cannot make or a loan that never decreases in principle. A VA cash out refinance loan at a reasonable rate will help you pay off your debt in a manner you can afford.
- Third, this type of cash out refinance loan can also help you if you have a second or third mortgage on your home. The cash at your disposal from the difference in the amount of your loan and the appraised value can be applied toward other mortgages so you have only one payment to make each month.
Unlike the streamline refinance loan which you can use on property you no longer occupy, you must be the primary resident of property you want to refinance with a cash out loan. This program is intended to support homeowners, not investors, so if you want to refinance the property you now use for rental income, this is not the loan for you. You can, however, refinance a multi-family home if you live in one of the units.
Who Qualifies For A Cash Out Refinance Loan?
As with loans for the purchase of new homes under the VA loan program, you must submit a Certificate of Eligibility to an approved VA lender. Your mortgage may have originally been a conventional loan, so you may not have a COE on file. If you have a DD 214 that shows your terms of service, you or your lender can obtain a COE if you meet certain criteria for eligibility:
- Service of 90 days during wartime or 181 days during peacetime for Veterans
- Service of at least 90 days for current members of the armed forces
- Service of at least six years for National Guard or Reserves members
- Status as the surviving spouse of a service member killed or disabled in action, missing in action, or taken as a POW
- Early discharge due to hardship, convenience of the government, reduction in forces, certain medical conditions, or disability
If your discharge was honorable and your records are complete, establishing your eligibility should be a simple matter for your lender. On the other hand, if you need to appeal your status or the VA needs more information to document your service, the loan approval process can take longer.
Capital Bank, N.A. Want To Help You Claim Your Benefit
If you are eligible, Capital Bank, N.A. wants to help you receive the benefits you earned. Visit our website to apply online, or contact one of our experienced loan specialists at (866) 216-3577. We will process your VA cash out refinance loan quickly to offer you the benefit of lower interest rates and cash in hand.