If you’re a veteran, you have several options for refinancing — ones that work differently than a streamline refi. With a VA cash-out refi, veterans like you can take out some of the equity and use it however you want.
Just like any other big financial decision, you’ll want to understand it fully to see if a VA cash-out refi is what you need to reach your financial goals. Read over this guide for a quick overview and contact our office for more details.
Not a veteran? No problem! There are many refi programs available. Contact us today to find out how we can lower your rate or your monthly payment, or get some cash out from your equity to help pay for those future college expenses.
Why you should consider a VA cash-out refinance
The biggest draw of a VA cash-out refi is the cash, of course! How much cash depends on how much equity you have on your home. For example, if your mortgage is $200,000, but you’ve paid off $60,000, then the full $60,000 is available to you (less closing costs).
It gets even better! Refinancing your loan could also mean getting a lower rate or even lowering monthly payment. You aren’t required to take out the full amount with a VA cash-out refi. You can take out much less. Perhaps 10k is all you need, and that’s okay!
How do veterans use their cash-out equity?
The choice is yours! Everything from remodeling your kitchen to buying a car to taking a vacation to paying for school expenses is allowed with a VA refi. If you have a lot of credit card debt and the interest rates are higher than your refi rate, you may even want to use that cash to pay off your debt.
Here’s another benefit: if you’re a veteran with a conventional or FHA loan, a VA cash-out refi can erase the mortgage insurance that is required with those types of loans. Mortgage insurance isn’t required with VA loans and veterans are eligible to get a VA cash-out refi regardless of what their current home loan is.
What if you don’t need the cash?
If you don’t need the cash but are looking to lower your rate, then take a look at an IRRRL. Interest rates with this type of refi tend to be lower, potentially saving you money in the short term as well as the long run.
The goal of an IRRRL is to refi into a lower rate and it’s also a requirement. So if your current home loan rate is lower than an IRRRL, then you will not qualify. Note that with a VA cash-out refis don’t have that “lowered rate” requirement.
Things you’ll need to apply for a VA cash-out refinance:
A VA appraisal may be required as well as a current copy of your credit. Of course, you’ll also want your VA certificate of eligibility. The only thing left is to apply! We’ve made it easy. You can get started right on our website. Click on the “apply now” buttons found throughout our site, and we’ll take care of the rest!
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Home improvement loans can be used for minor upgrades or major repairs or even complete remodels. Everything from replacing old plumbing to making your home more energy efficient are great reasons to consider a home improvement loan. With much better rates than a credit card and more options for repayment, homeowners just like you are discovering how easy it is to make those necessary home improvements.
Speaking of options, you have quite a few and there are some that are better than others depending on the situation.
If you’re doing minor repairs: An unsecured loan would be your only option. An unsecured loan means that your home is not used as collateral. Since you have little to no equity AND the repairs would not increase the value of your property, there is essentially nothing to use as collateral.
While not the best scenario to be in, we understand that there are circumstances that require getting a home improvement loan. Despite having a higher interest rate than other home loans, it’s often a more attractive option than putting it on a credit card.
If you’re doing major repairs remodeling: A few options in this scenario. If your current mortgage rate is low, consider a second mortgage. In this case, you keep your current low-interest home loan. However, if your current home loan has a higher rate than what is now available to you, refinancing your loan under a renovation loan or a cash-out refi would be the way to go.
In the latter scenario, we would need an itemized repair and remodel plan so that we could better assess the “after-improvements value” of your home. Both of the loans mentioned above have lower interest rates than an unsecured home loan, but remember to still include closing costs.
Significant Amount of Equity Scenario
If you’re doing minor updates: Consider getting an unsecured loan or even a line of credit if you’re in this situation. With a loan this small, it’s often better to use the option that has low or no closing costs. Another benefit of a home equity line of credit (HELOC) is that you can reuse it if needed.
If you have major updates or remodeling: In this scenario, you’re eligible for several different home improvement loans. A HELOC, a second mortgage, or a cash-out refinance are ones to consider. Ultimately, what will determine the best option is your particular financial situation or the desired goal. For example, if you want to keep your current interest rate, get a HELOC or second mortgage.
While they have higher interest rates on these, you’ll save on closing costs. However, if you prefer cash flow or can lower your interest rate on your first mortgage, look into a cash-out refinance.
We’ve outlined the basic situations for choosing the right home improvement loans, but there are many more factors to consider. Contact Tara Mortgage Services today for a no-obligation consultation with a mortgage professional. We look forward to helping you!
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Whether you’re renovating for style or repair, making changes to your home is exciting –and daunting! Planning what to upgrade, where to purchase the supplies, who to trust to do the work are just some of the daunting tasks involved.
But there’s one other detail that needs to be figured out before anything else: how to finance the renovation.
The cost of renovation varies quite a bit, but generally speaking, we’re talking a few thousand.
As in most situations, saving for a big project is ideal, but it’s not always possible. You may be able to crowdsource some of the funding by asking your parents for help or possibly asking friends and family for cash gifts for your wedding or birthday. But it’s unlikely to be enough to finance your home makeover.
For a more sure way to get the money you need to repair or upgrade your home, consider these home loan options.
How To Fund Your Home Renovation
This method is one of the most popular ways to fund many things, including home renovations. Similar to a savings, your home equity is a stash that you can tap into when it makes sense. What’s even better is that refinancing into another loan may also lower your monthly payment or otherwise save you money. There’s also more than one type of refi program. So depending on your credit and other qualifying factors, funding your project with a new home loan may not change your monthly payment at all!
The key here is that it “makes sense” for your loan and financial situation. To see if this is the right choice for you, please contact Tara Mortgage Services.
2. Get a HELOC
If your interest is already low or maybe you’ve already paid off your loan and rather not refi, then consider a HELOC. A Home Equity Line of Credit is a way to access your equity without refinancing. Similar to a credit card, you “borrow” money against your home as needed. Unlike a regular credit card, the interest rates are much lower. One thing to note is that a HELOC is usually an adjustable rate loan. However, fixed-rates HELOC’s are available, too.
Another home loan option that does not require refinancing is a Home Equity Loan. This type of loan requires you to take out the funds all at once, rather than “as needed” in a HELOC. The benefit of this loan is having a lump sum, which may be just what you need for your renovation. You’ll also get the stability of a fixed rate with this type of loan.
Confused as to which loan is best for you? Tara Mortgage Services is here to help! Contact them today for an obligation-free consultation and get on your way to a renovated home at a cost you can afford.
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In previous posts, we talked about the current rise in mortgage rates and whether it’s still a good time to buy a home (yes it is!).
This week, we want to focus on refinancing and whether you should consider it in this market. While it may not be the right time to refinance for all homeowners, some situations make it the ideal time to refi. Here are a few scenarios where refinancing your mortgage makes sense even during times of rising rates.
Not sure if you fit these situations? Need personalized answers? Contact Tara Mortgage Services for expert mortgage assistance!
Five Scenarios That Suggest Now Is the Right Time To Refinance
1. Your ARM is due to reset soon
If your adjustable rate mortgage is due to reset within the next year or so, switching loans now could save quite a bit. Whether switching to a fixed-rate mortgage or another ARM, changing your about-to-expire ARM means that your rate is guaranteed for a longer time, despite market fluctuations.
2. You want to consolidate loans
Student loans, medical bills, and credit cards typically have higher interest rates than even the highest mortgage rates. If you are looking save money by consolidating your loans into a lower interest rate mortgage, refinancing can make it happen. You’ll also have the convenience of getting rid of multiple payments. Sometimes the additional cost comes from accidentally missing a payment, resulting in late fees.
3. Your credit improved
If your credit score has increased since you first got your original mortgage, then refinancing could make sense. The best rates and loan programs are often reserved for those with favorable credit scores. So if you weren’t able to qualify for a special home loan program before, you could be eligible now!
Depending on when you first got your loan, there could be new programs now that didn’t exist before. This is often the case in the mortgage industry –new home loan programs are available and eligibility standards adjust as the market and regulations change.
4. Your income has increased
If your income has increased since you last qualified, your debt-to-income ratio has likely also changed. More disposable income with little to no difference in your debt makes you much less of a “credit risk.” And just like the above scenario, you’ll likely qualify for mortgage programs this time around that you didn’t before.
So if you’ve gotten a raise, your spouse has gotten a raise, or if you changed employment where you earn more, then refinancing your current mortgage may be right for you.
5. Your home is located in a “hot market” area
If you live in an area where property values are rising, and you want to use your home equity, then you’ll want to consider a cash-out refinance. Remember that property is an investment and the “earnings” from rising home values is often your best option when you need cash. Use the money to make home improvements, help pay for your children’s college tuition, start up a business, or anything else where a lump sum is needed.
Everyone’s financial situation and goals are different, and truthfully, it may not be in your best interest to refinancing your loan at this time. Contact Tara Mortgage Services today for an honest, fast, and personalized refinancing assessment.
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Do any of these 7 financial situations sound like you? If they do, then you might be ready to refinance your mortgage!
Top Reasons to Refinance Your Mortgage
1. Your Interest Rate is Higher than Current Mortgage Rates
Interest rates change, and in recent years, have adjusted in your favor! If your mortgage closed more than 5 years ago, the chances are that your rate is higher than current mortgage rates. Refinancing to lower the mortgage interest rate is the top reason that clients contact our office.
2. Looking To Lower Monthly Payment
When you refinance into a new loan, not can you get a lower interest rate but it also adjusts your monthly payments. For example, if your original loan was for 300k with a 30-year term and you’ve paid off 60k since then, your new mortgage will be for only 240k. What’s more, the clock for paying off the loan in 30 years restarts!
3. You Want to Make Home Improvements
A cash-out refi, home equity loan, or HELOC gives you access to the equity of your home. Each of these refinances options are different and one might be better suited for you than the other. Call our office for help deciding which refi is right for you.
4. You’re Nearing Retirement
If you’re approaching retirement age, a refi can lower your monthly payment into one you can afford more comfortably. If you’ve already paid off your loan, consider a reverse mortgage to help supplement your retirement income.
5. You Want a Fixed Rate
An adjustable rate mortgage starts low but eventually changes after a certain number of years, and usually, the rate goes up. Getting into a fixed-rate avoids these drastic changes and locks in a low rate for the life of your loan.
6. You Want to Pay Off Your 30-year Mortgage Sooner
Refinancing your 30-year fixed rate mortgage into a 10-year or 15-year mortgage will help you pay off your home sooner. Interest rates on 15-year loans can be as much as a full percentage point lower than a 30-year loan. This means that more of your payment goes toward the principle plus you also save money on interest!
7. Your Credit Score Has improved Since You Last Closed
Remember that your interest rate is largely dependent on your credit score. If it’s gone up since your closed your loan, that means that you likely qualify for a lower rate today! How low? Apply to find out! Use our free online application and we’ll let you know what rate you qualify for now.
There are many more reasons why people come to see us about refinancing their current loan. Want to find out if refinancing can help you out in your financial situation? Contact Tara Mortgage Services today for a no-obligation refinance consult!
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