No Money Down OR – WA – CA

In my continuing endeavor to answer peoples questions about loans and lending, today, I have picked a question that has several things involved with it, a cash out refinance of a VA Guaranteed Home Loan. Again, the question comes from My FHA Mortgage Blog and hopefully will answer questions for several people facing the same issue.

I Need Some Information From Someone Who Has Used A Va Home Loan….?

November 19, 2009

I’m not sure that I am understanding how it works…. what I am looking at is: I have a mortgage of 62,000 my home is valued at around 110,000 … I would like to refinance 95,000 (figuring 3000.00 in paperwork fees and 30,000 cash out)……. so how would a va loan work in that instance???? What would I be looking at payment wise???

 

In response to this question, I am going to answer part of it, but not the part about payment since this will be determined by what loan he/she actually gets. To begin with, a loan of $95,000 on a property worth $110,000 is well within the 90% loan to value that most lenders have adopted for VA cash out refinances, however, thinking that the loan will only have $3,000 in fees is probably not right. Depending on where the property is located and how much taxes are and the interest rate chosen, this number could be a lot closer to $4,000 – $5,000 in total closing costs.

Additionally, VA allows cash out refinances of up to 100% loan to value. There are still some wholesale lenders that are offering this product, although not many. As far as how it works, it would be like most any other cash out refinance. There would need to be an appraisal, the customer would need to income and credit qualify for the loan and it would need to close, including a 3 day right of rescission. As a refinance, there are some fees that are not allowed to be paid by the veteran, so they would have to either be absorbed by the lender in rate enhancement or a discount fee would be charged.

Also, since this would be subsequent use of VA entitlements, the funding fee would be higher than with the original purchase (if that was first usage). There would be no funding fee if the borrower has a 10 percent or greater service connected disability.

I hope this answers this question satisfactorily and gives some needed information to anyone contemplating a VA refinance. Beside the cash out refinance, VA also offers a IRRRL (Interest Rate Reduction Refinance Loan), or streamline. In some cases, the streamline no longer is and requires that a new appraisal be performed. Again, this will vary from lender to lender. Again, non allowable fees need to be absorbed in the loan somewhere. Just because VA has determined the fees are “non allowable,” doesn’t mean they don’t exist.

If you have questions about VA loans, please contact me at 541-342-7576/541-221-3455 cell or e-mail me. I am a Vietnam era veteran and have a VA loan myself. I believe it is an excellent benefit for our veterans and active duty military. Call me to see if you will benefit from a VA loan.

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