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VA cash out refinances

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VA Cash Out Refinances

VA cash out refinances help you get cash from the equity in your home. You replace your current VA mortgage with a new VA mortgage for a higher amount and get the difference in cash when you close.

For example, pretend your current mortgage balance is $300,000. With a VA cash out refinance, you might be able to get a new VA mortgage for $360,000 resulting in $60,000 cash.

You can use this cash to pay for home improvements and college educations or to help consolidate higher interest debts. See our cash out refinance example to learn more.

Veterans, military personnel, and surviving spouses may be eligible. You need to meet credit, income, and financial requirements to get approved. Freedom Mortgage is a top VA lender in the U.S. according to Inside Mortgage Finance, Jan.–Mar., 2024.

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VA Cash Out Refinances

  • Only qualified Veterans and others eligible
  • Minimum credit score often 550
  • No mortgage insurance
  • Funding fee required
Learn More
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Conventional Cash Out Refinances

  • All qualified homeowners eligible
  • Minimum credit score often 620
  • No mortgage insurance with 20% equity
  • No funding fee
Learn More
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FHA cash out refinances

  • All homeowners eligible
  • Minimum credit score often 550
  • Mortgage insurance required
Learn More
  • A VA cash out refinance allows you to tap your home's equity to get cash. It takes your existing VA loan and replaces it with a new VA loan for a higher amount. When you close, you receive the difference between the two loan amounts in cash.

    One benefit of VA cash out refinances is that you are often able to borrow more money from your home's equity compared to other loan types. VA cash out refinances also have competitive rates, low minimum credit scores, and no mortgage insurance, although most VA borrowers need to pay a funding fee.

  • How much cash you may be able to get depends on your home's current value and your loan's current balance. It also depends on the maximum loan-to-value ratio (LTV).

    You often can't borrow the full value of your home's equity with a VA cash out refinance. Instead, you can only borrow most of its value based on the cash out refinance's maximum LTV. .

    At Freedom Mortgage, we typically offer 90% maximum loan-to-value ratios on our VA cash out refinances. Take at a look at this sample calculation:

    Home Value $400,000
    Current mortgage balance $300,000
    Sample maximum LTV 0.9 or 90%
    Maximum new mortgage balance $360,000 ($400,000 x 0.9)
    Maximum cash available $60,000 ($360,000 - $300,000)

    In this example, the homeowner can increase their VA mortgage balance to $360,000. This is equal to 90% of the home’s current value.

    To get the homeowner’s estimated $60,000 in available cash, subtract the current mortgage balance from the new maximum mortgage balance. You can estimate how much cash you might get from your home with the calculator on this page.

    Keep in mind that VA cash outs come with closing costs you will need to pay or add to your loan amount. If you add closing costs to your loan amount, this can reduce the amount of cash you might get.

  • You’ll have to fill out a new mortgage application, provide documents, and meet financial criteria to get your VA cash out refinance approved. Other requirements include:

    • Eligibility. Only Veterans, active-duty military personnel, and surviving spouses are eligible to apply for VA cash out refinancing. Learn more about VA loan eligibility.
    • Home equity. You need a reasonable amount of home equity to get cash by refinancing. You can often get more cash with a VA loan compared to other loan types. Learn more about home equity.
    • Credit score. At Freedom Mortgage, we can often accept credit scores as low as 550 for VA cash out refinances.
    • Home appraisal. We’ll probably request a new appraisal to estimate your home’s current value. This estimate helps us calculate how much equity you have.
    • Title search. We usually request a title search to check there are no liens or other claims on the home that might affect your approval.
    • Funding Fee. You’ll pay a fee between 2.15% and 3.3% of the loan amount for VA cash out refinancing. Some disabled veterans and surviving spouses may be exempt from paying this funding fee.
    • Closing costs. Closing costs can average between 2% to 6% of the loan amount according to Nerdwallet. These closing costs are in addition to the funding fee. You can often roll the funding fee and closing costs into your loan amount.
    • Disclosures and closing. You’ll need to sign disclosures and attend closing for your refinance. Learn more about our loan application process.

    Remember that VA cash out refinances increase how much money you owe on your mortgage. This means you’ll probably pay more in interest over the life of your new loan.

    VA cash out refinances may also increase the number of years you are paying back your mortgage, which can also increase the amount you pay in interest. Learn more about cash out refinancing pros and cons.

  • The VA cash out rate we may be able to offer is personal to you. Your rate is affected by your credit score, your income and finances, and the value of your home’s equity, as well as the current mortgage market environment.

    We may be able to offer you a rate that is lower—or higher—than the rate you see advertised by other lenders. Ask us today what VA cash out rate we can offer you by calling 877-220-5533.

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Your home's equity can help you get cash

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Tax implications of a cash out refinance

Will taking cash from your home’s equity affect your taxes?

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Cash out vs. no cash out refinances

Learn the differences between them!

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