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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Government-back home loans offer some of the best rates and perks, especially when it comes to Veteran home loans. But is that the right choice? Should you opt for an FHA home loan instead?
Remember, our office is here to guide you! There’s no rush to decide on your own which home loan you should pick. Instead, read this article to get an idea, start the loan application (available online), and we’ll contact you with personalized mortgage options.
How Do VA Loans and FHA Loans Compare?
If you don’t have enough for a down-payment or would rather not use your savings for a down payment, then you’ll want to look at a VA loan. A VA home loan is one of the few loans that doesn’t require a down payment.
Though, FHA loans fair pretty well too. It only requires 3.5% down payment, and any money that you can put down now will save you in the interest you pay over the life of the loan. Plus, putting money down jumps starts your equity.
VA loans don’t require insurance, regardless of whether you put money down or not. This can save you quite a bit in both in the short and long run.
With an FHA loan, down payments of less than 20 percent require a mortgage insurance premium, commonly called MIP. You’ll pay this either at the closing of the loan or in monthly payments.
Here’s another thing to know about FHA loans and insurance: the MIP will last the life of the FHA loan unless you refinance. It won’t automatically cancel after you’ve built enough equity. Having to refinance is not a bad thing –actually, it can work in your favor to get a new loan based on current rates and your improved credit score.
Mortgage rates are always changing, so we can’t say for absolute certainty that one loan will have a lower rate than the other.
However, based on what we’ve seen in the past, VA loans typically have lower mortgage rates than FHA loans.
VA loans don’t have a minimum credit score. However, it’s still necessary to run your credit when applying for a VA mortgage. Also, while there isn’t a set minimum credit to be eligible for a VA loan, a very low credit score could affect your approval.
The minimal credit score for an FHA loan is lower than traditional loans. And, generally speaking, FHA loans are more flexible with credit score requirements.
Which loan should you choose?
It certainly looks like a VA loan comes out on top in this simple comparison, but every financial situation is different. The best way to know is to contact Tara Mortgage Services today so that we can present you with more accurate, personalized scenarios based on your credit and current rates.
ALEX DEACON’S OCTOBER WORKSHOP ANNOUNCED!
Click below to secure your spot for the most requested topic of the year!
How to find and analyze my next RE Investment
Saturday, Oct 13, 2018, 10:00 AM
Hampton Inn Bridgeville 150 Old Pond Rd Bridgeville, pa
9 Members Attending
This is our most widely asked for workshop. We do this a few times a year and it will contain the steps you can take right now with very little experience. You can implement these steps and start using them in your day to day investment journey. We will discuss and hit on a few very important ideas on how to do the following 1. Where to look for …
If you’ve been toying with the idea of buying a house but the lack of down-payment funds is holding you back, you’re in luck! We’re going to show you how you can buy a home this summer even if you don’t have a penny saved for a downpayment.
No Money Down Home Loan Programs
USDA Home Loan
A rural development mortgage from the USDA is a zero-down loan for low-to-moderate income families. Besides the no money down, you’ll enjoy other perks like a mortgage insurance premium (mip) is that’s lower than most other home loans. There are a few limitations to this loan, mainly the location of the home and your income.
VA loans are for those who are currently serving in the armed forces, previously served and is now a veteran as well as for spouses of veterans.
In other words, if you currently receive or qualify for any benefits from the military, then you’re likely eligible for a VA home loan. In addition to the zero down-payment, you’ll also save money on mortgage insurance because VA loans don’t require it! VA loans are also flexible with credit score requirements. You’ll need a VA certificate so be sure to contact the Department of Veteran Affairs to get yours and contact us to get started with your loan application.
FHA loans are government-backed with have flexible qualifying requirements similar to VA loans. While you’ll still need a down payment with an FHA loan, the minimum is much lower –sometimes as little as 3.5% of the purchase price!
Here’s a hint for using an FHA loan AND still pay zero down: use gifted funds!
While other loans have limitations as to how much of your down-payment can be gifted, and FHA mortgage allows you to use gifted funds for 100% of your down-payment. When you combine that perk with that of only 3.5% down, you can see how easy it is to buy a home with an FHA loan!