Rate & Term vs Cash-Out Refinance
Normally, rate & term refinances and cash-out refinances are treated differently. For all othe rmortgage options, other than VA, cash-out refinances are considered a higher risk and therefore have lower loan-to-value limits and sometimes a higher interest rate.
VA does not distinguish between a rate & term refinance and a cash-out refinance – they are the same thing with VA financing. If you are doing a VA refinance it does not matter whether you get money back or not…there are not changes to the interest rate or loan terms for doing so.
VA offers 100% financing at the time of purchase or when looking to do a refinance.
This means that you can borrow up to the value of your home as determined by the appraisal at the time of the refinance.
VA does have loan limits that could limit the amount you borrow when doing a VA refinance.
Those loan limits vary by the county and state the property is located.
Exceed the Loan Limits
VA mortgages just keep getting better and better.
VA allows you to exceed the loan limits. The only requirement is that once you exceed the loan limit you must show at least 25% in equity between the loan limit and the value of the home.
As an example, a $500,000 home value in an area with a $400,000 loan limit would have a max loan amount of $475,000 (25% of $500,000 is $25,000).
Interested in a VA Refinance?
We would love to assist you with your VA refinance to make sure you know your options and that a refinance will truly benefit you.
We offer a free refinance analysis. When completing a refinance analysis it is important to consider both the short-term and long-term impacts of doing so. Some of the considerations we look at include:
- Existing vs new interest rate
- Existing vs new term (length left to pay)
- Mortgage Insurance
- How cash-out will be used
- Closing Costs
Before you move forward with a refinance be sure to consider every detail to make sure that doing the refinance will truly benefit you…and not just the lender!