VA Cash Out Refinance

What is a VA cash out refinance and how does it work?

Put your home’s equity to work for you with a VA cash out refinance. If you want to lower your rate, but also get cash to pay bills, consolidate high-interest credit card debt, improve your budget or make home improvements then you may want to opt for a VA cash out refinance.

How does a VA cash out refinance work? This type of refinance is different from a VA Streamline Refinance (IRRRL) as it allows you to tap into the equity in your home to access cash to pay off debt, make home improvements or fund a high-cost expense such as a car or college. Qualified homeowners can refinance up to 100% of their home’s value for mortgage debt. VA homeowners can also refinance a lower percentage and use the cash to cover debt payments and other needs.

What are the benefits of a VA cash out refinance?

A VA cash out refinance gives you the flexibility to use your home's equity to pay off high-interest debt and expenses. The proceeds from a VA cash out refinance can also be used to pay down credit card balances, medical expenses and student loan debt as well as to pay for college, make emergency home repairs or renovations and improvements. There are also no restrictions in how you use the money you take out. In addition, since you are also refinancing your VA loan, you may even be able to reduce your interest rate and adjust your loan term as well.

VA cash out refinance vs. VA Streamline Refinance

The VA cash out refinance process differs slightly from a VA Streamline Refinance (IRRRL). With a VA streamline refinance, there is less paperwork needed and it’s a shorter process. For a VA cash out refinance, the borrower needs to verify income as well as get a home appraisal to determine how much their home is worth. Here are some more differences between the two VA refinance options.