VA Home Loan Cash Out Refinance Requirements

With home values in NC increasing so much right now, many folks who purchased a home 5 years ago, have equity in that property.  With a VA Home Loan, you don’t have to make a down payment – so many Veterans buy their home with little to now equity.  A Veteran who purchased a house in 2012 in NC  for $175,000 might find that the home is now valued at more than $225,000!  Because of that, we are talking to many Veterans who are interested in a VA Home Loan Cash Out Refinance to make improvements on their home, or to pay off debt, or pay for college tuition.  Qualified Veterans are able to pull cash out of their home in NC for any reason.  Rates are still super low, and in many cases, as a tribute your Service, we are willing to pay for your appraisal.*

Like all VA home Loans, the cash-out refinance does not require monthly mortgage insurance.  There’s a guarantee fee paid upfront, and rolled into the loan.  The VA Home Loan cash out program is the only refinance available today that permits cash to the borrower with a loan-to-value of 100%.  VA Cash Out Refinance with a 100% Loan to Value (LTV), is only available if the middle credit score is 620 or greater (90% maximum LTV if score under 620).

So back to our example, the Veteran purchased a home in Raleigh in 2012 for $175,000, and the home now appraises for $223,000.  They originally put no money down on the mortgage, but they’ve been paying down on the mortgage for 5 years, so the balance is now a little over $154,000.  The Veteran can now tap into more than $70,000 to Invest in what ever they want to!

For veterans, this loan could be the best way to put home equity to work to complete long-standing financial goals.  Rates are low, and approval is easier than for standard cash-out programs.  Additionally, if you have a 13th payment each year on a 30 year mortgage in NC, you will literally pay the mortgage off in 17.5 years!  You can have the flexibility of a low 30 year payment, but you can be conservative and pay the mortgage off early!

What is a VA Home Loan Cash Out Refinance?

There are several ways to refinance a VA Home Loan.  The VA Home Loan Cash Out Program in NC is the more flexible of the two Veteran Home Loan refinance options. It allows you to receive cash back at the VA Home Loan closing , or refinance from a non-Veteran Mortgage (like a Conventional or FHA Loan) to a Va Home Loan.

VA Home Loan Streamline Refinance

The VA Home Loan Streamline Refinance program allows a Veteran to refinance loan size only big enough to pay off the existing loan and pay for closing costs. Sometimes referred to as a IRRL, or Interest Rate Reduction Loan, the Veteran must currently have a VA home loan.  With the Streamline Refinance, we are simply trying to reduce the interest on the mortgage in NC, or reduce the number of years that you will owe on the mortgage.  So, for instance, if you took the mortgage out in 2016 as a 30 year mortgage, and in 2018, you want to reduce the mortgage to a 20 year mortgage.  This would cut 8 years off of your mortgage, which is definitely an advantage.

VA Home Loan Cash Out Refinance

With the VA Home Loan Cash Out Refinance in NC we have more options.  With the program, we can allow the Veteran to refinance up to the home’s appraised value (assuming you’ve int he home for 12 full months).  The Veteran has the opportunity to use that equity in the home to pay for closing costs, pay off college tuition, get married, pay medical bills – or make improvements to the home!

As another example an eligible Veteran owns a home in NC that is now worth $250,000.  If her current pay off of her mortgage is $130,000, she has $120,000 she can use.  Does she have to pull ALL of that money out of her home?  NO!  We typically suggest that a Veteran use a different avenue (in the situation) to find the money if all you need is $7000 for instance.  This is a great program for a Veteran that is facing the unfortunate possibility of divorce, and has to “buy out” their spouse.

Remove mortgage insurance

Because the VA Home Loan Cash Out Refinance can work with any other current mortgage, it can be used to get out of PMI on another type of mortgage loan.  So if you have a FHA Mortgage, and you are currently paying $287 a month in Mortgage Insurance, you might want to refinance into a VA Home Loan that has no monthly PM fees.

A Veteran Mortgage Loan in NC does not have monthly PMI fees… so let’s say you save that $287 a month from the FHA loan for three years?  That’s $10,332 you just saved, or pay down on your mortgage!

FHA PMI rates are some of the highest monthly PMI fees charged, and they will never go off the mortgage.  Meaning no matter how much equity you build up in your home, you will ALWAYS have FHA PMI payments.

On a Conventional Loan, let’s say you took out one of the HomeReady or Home Possible Loans in NC with 3% down payment – unless your credit score was above a 780, your PMI is significantly higher than FHA – and flipping that loan to a VA Home Loan might save you more than $10,000 in three years.

How could that happen?  Meaning if you qualify for a VA Home Loan, how or why would you currently have a Conventional or FHA Loan in NC?  We just had a Veteran marry a woman who already owned a town home.  She financed the home 2 years ago with a FHA Loan, so with his VA Benefits, they were able to qualify, even though the rate was a little higher, and save more than $200 a month.

Another situation we had last month involved a Veteran who still owned a home in San Antonio, and they purchased the home in NC last May with a Conventional Mortgage for $300,000.  Now that the home in San Antonio sold, they wanted to refinance.  They didn’t make a ton of money on the home in San Antonio, and decided to keep that money in Savings.  But, we were able to refinance the Conventional Mortgage to a VA Home Loan, and save them more than $300 a month!

VA Home Loan Cash Out Refinance in NC Requirements

VA Home Loan Cash Out requirements are similar to those for a purchase transaction.  Meaning, we need to peek at your credit report, we have to verify your job, and do a new appraisal on the home.  The only difference is that we might not need any deposit information, unless you are paying your closing costs and not taking that money out of the home.

If you are paying off credit cards, or a car, or student loan debt – we will need payoff information of exactly how much you owe.  We had an Eastern NC Veteran who recently wanted to pay off $21k on a Cessna.  We can do that.

The Veteran’s Administration doesn’t make these loans, but they are the ones who are approving the terms under which they will insure us against default.  Because of that, they set up the expectations.  (READ THERE ARE STRINGS ATTACHED) The VA wants to see that you have not been past due on your mortgage more than 1 time in the past 24 months.  They are looking for something close to a 41% total debt ratio, and yes, they do count child care costs when qualifying you.

You will also need to establish eligibility based on military service. Eligibility is based on the amount of time served, and the period in which you served. You are probably eligible if:

• You served 90 days in wartime and are now separated
• 90 days and are still on active duty
• 181 days in peacetime and are now separated
• 2 years if enlisted in the post-Vietnam era
• 6 years in the National Guard or Reserves
• Or, if you are a surviving spouse.

We will need discharge papers to see if you have any Eligibility, and what the VA Home Loan Guarantee.  With your paperwork, we can check all of this electronically:

Members of the Reserve Corp only receive a DD Form 214 when they served on active duty. If you served in the Guard or Reserves, but were never activated, you may not have a DD Form 214. This is the case even if you successfully and honorably served your term. Guard and Reserve members who complete their term of service are issued a DD Form 256 (Honorable Discharge Certificate) or DD Form 257 (General Discharge Certificate) upon completion of their term. Fee will be.  .

VA Cash Out Refinance Loan Limits

The Veteran’s Administration establishes the most it will loan to Veterans in NC.  This amount varies based on the County and is also adjusted annually in NC.  In 2018, the standard Veteran home loan limit for most of NC is $424,100 for a single family home. There are a few areas along the Northern NC Coast (like near Duck) with a high-cost maximum loan limit of $721,050.

There’s a way to do a cash out refinance above the $424,100 limit for most of NC.  To do a Jumbo VA Home Loan, you need to keep at least 25% of the equity over the $424,100 limit in the home.  As an example:  You have a home with an appraised value in NC for $625,000.  The current balance is $500,000.

You have to keep 25% of the difference between $625,000 and $424,100 in the home.  After that, you can cash out all the way up to $625,000.

Most home owners, don’t require VA loans over the $424,100 limit. In fact, according to 2016 data from VA, the average Veteran home loan refinance in North Carolina was just over $250,000.

VA Home Loan Cash Out Refinance to consolidate mortgages

As mentioned earlier, you can have situations where the Veteran has a mortgage that is not currently a VA Loan.  In those situations where the Veteran also has a second mortgage, or an Equity Line, can those be combined into one VA Home Loan?  Yes, with the VA Home Loan Cash Out Refinance in NC, this can often times save the Veterans thousands of dollars.

The Veteran can pay off both mortgages or HELOCs, get rid of PMI, and put both mortgages into one.  This is especially helpful in the currently interest rate environment, as we know that mortgage interest rates are going to continue to go up.  Most second mortgages and Equity Lines are adjustable rate, variable rate, or interest only mortgages.  Combining those mortgage loans into one fixed rate mortgage usually makes the most sense.

If there is cash left over, the homeowner can cover medical bills, handle a family emergency, start a business, pay off high-interest short-term loans or almost any other purpose.

We have years of experience helping Veterans Refinance their homes!  For more information about VA Home Loan Cash Out Refinance mortgage rates in NC, contact Steve and Eleanor Thorne , 919-649-5058.  We offer the best VA Refinance Rates.  *Pay for your appraisal.*  You must pay for the initial appraisal, and we will credit it back to you at closing.