If you are a veteran and are interested in refinancing your existing loan, whether you’re looking for new terms or some cash on hand for a project, a VA Cash-Out Refinance loan can help you reach your goals. Like VA loans for purchases, you’ll have low or no down-payment requirements, and your loan will be backed by the VA.
But what do you need to do to get a VA Cash-Out loan? These are four requirements that you should be aware of.
Your eligibility for a VA loan will be based on your service, including how long you served and what position you served in. A Certificate of Eligibility can be obtained by either showing DD Form 214 or a statement of service if you are still on active duty. Surviving spouses can submit a veteran’s DD 214 form and additional supporting documentation to determine eligibility.
Typically, you’ll qualify for a VA loan if you meet any of the following criteria:
Active service members
Veterans who were not dishonorably discharged
Active Reserve or National Guard, with six years of service
Surviving spouses who did not remarry
2. A New Appraisal
You’ll need to have a new appraisal done on the property to determine what your home’s current value is. If you purchased your Orange County home ten years ago, the amount might look quite different today, and your lender will need to know.
3. Personal Documentation
As with any loan, you’ll need to provide proof of income, including any W2s or possibly tax returns. If you’re holding other debts, the lender may want to see an itemized list, and if you’re using this new loan to pay off those debts, they may want to know which ones will be paid. The lender may look at your debt-to-income ratio, meaning how much you owe in total compared to how much you make and will look for an ideal ratio of 40% or less.
4. Primary Residence
You can only obtain a VA Cash-Out refinance on your primary residence, not on investment properties. You’ll also need to have an existing mortgage on your property to refinance, although your current loan does not need to be a VA loan.