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Cash-out Refinance: an Overview

Cash-Out Refinance Option
The Veterans' Benefits Improvement Act of 2008 allows you to free up cash with a cash-out refinance, a VA home loan refinance program in which you can cash-out on the equity you have built up in your home. As an example, if you still owe $70,000 on your original loan, you can refinance for a $90,000 loan, which gives you a cash-out of $20,000. 

Cash-Out Refinance Advantages:

• The interest rates on cash-out refinancing are usually lower than the interest rate on a home equity loan.
 • You may be able to get a lower interest rate on your refinance than you have on your current loan.

• You can use the proceeds for any purpose, including home improvements, paying off debts, or just having more cash available every month.
Below are the major points for a VA home loan refinance under the cash-out program:

  • An appraisal is required and you must qualify for the loan.
  • If you are refinancing for the first time, the VA charges a 2.15% funding fee for this program (2.15% of the total loan) which can be rolled into the loan amount. If you refinance more than once, the funding fee is 3.3%.
  • There is no minimum amount of time that you must own your home, yet your home must have sufficient equity to qualify for VA refinancing.
  • Existing loans can be refinanced whether they are in a current or delinquent status, but refinancing loans are subject to the same income and credit requirements as regular home loans.
  • As long as you have title to the property you can refinance an assumed loan. Check with your lender as there are some additional regulations concerning assumed loans.

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