Over the years I have been fortunate to serve thousands of Veterans with all of their VA Home Loan financing needs. Over the course of the last 15 years, you can imagine that I have spoken to a lot of Veterans and answered a lot of questions.
What common thing I have observed is this: We as Veterans understand we have our VA Home Loan Guarantee but we are oftentimes uninformed about all of the various financing strategies that can be used with the VA Home Loan.
Chief among them would be the VA Cash Out Refinance. "Really, I did not know the VA allowed us to do a cash-out of up to 90% of the home's appraised value." That's typically how the conversation goes when I'm speaking to Veterans about refinancing their mortgage.
We take advantage of it to get into our home, but the reality is that's just the beginning when it comes to the VA Home Loan Benefit.
How This Mortage Refinance Option Works
So let's review this option and how it works. First off, it's important for us to know as Veterans that this is not an automatic approval. Just like the last time you used your VA Home Loan you had to qualify, you've got to do the same this time around. So gather up all of the W-2's, bank statements, pay stubs, tax returns, etc. and get them over to your lender, because you are still going to have to qualify for the loan.
Now that we know that, let's talk a little bit about the power of the VA Cash Out Refinance and what you can use it for. As mentioned earlier, this is the only loan that will allow a Veteran to borrower up to 90% of the home's appraised value with no Private Mortgage Insurance.
Why Refinance Your VA Loan?
So why would a Veteran want to borrow up to 90% of the home's appraised value? Let's review a few strategies that we have implemented with our Veteran clients.
Strategy 1: Debt consolidation
By utilizing the equity in your home, you can use the VA Loan Cash Out Refinance to pay off revolving debt. We all know that credit cards often carry higher rates and higher monthly payments. By consolidating cards into one loan with a lower rate, you could possibly save hundreds, maybe even thousands, of dollars in monthly cash flow.
Strategy 2: Fund a remodel / renovation
Utilize your VA Loan Cash Out Refinance to upgrade that kitchen you've always dreamed of having or perhaps bathrooms that need updating. Regardless of the scope of your project, this type of mortgage loan is certainly a beneficial strategy to consider, as it allows a Veteran to get a low 30 Year Fixed Rate as opposed to having to pay cash.
Strategy 3: Use it to put the kids through school
Got kiddo's starting at the university soon? Want to start them off on the right foot, not having the burden of mounting student loan debt? This type of mortgage loan allows a Veteran to use the proceeds from the cash-out refinance and pay for the kiddies' schooling as they see fit.
Whatever the reason may be, remember Veterans that we will always have access to this type of refinance mortgage loan. Oh, and one more thing…it does not have to be a VA Loan currently. In other words, let’s say you're making payments on a Conventional Loan and you want to utilize the VA Cash Out – no worries at all.
Find a VA Loan Expert
Last thing to keep in mind here Veterans (and perhaps the most important), it’s important to make sure you roger up with a lender who understands the VA Home Loan process who will ensure your VA Loan Cash Out Refinance goes off without a hitch.
For more questions and answers regarding VA home loan benefits, feel free to call my office direct at 602-908-5849.