If you’re in need of cash, a VA Cash-Out Refinance loan can help you access additional funds. You’ll essentially take out a new loan, and you can use any extra money to fund whatever it is you need. If you have a current non-VA backed loan, you also have the option to refinance that property to take advantage of better rates and terms.
You’ll have to pay fees for your new loan, no matter where it comes from, but VA Cash-Out loans have many benefits over conventional refinance loans, and one of those is transparency and consistency of fees. You’ll also have the option to pay your fees in cash or to bundle them into the total cost of your loan – although you will then be responsible for accumulated interest on top of those costs. How much will you be responsible for when getting a VA Cash-Out loan?
You’ll need to make an upfront payment of a funding fee when getting a VA Cash-Out refinance, and if you are putting down 5% or less as a down payment, you should expect it to be between 2.15%-3.3% of the loan value. The more significant your down payment, the less your funding fee will be.
Funding fees will also be influenced by the type and length of your service, and whether you have obtained a VA loan in the past.
Funding Fee Exemptions
There are cases in which you may qualify as exempt from any funding fees. Typically, you’ll need to prove a disability acquired during or related to your service, and will need to be approved as exempt by the VA.
Other Costs Related To VA Cash-Out Loans
The funding fee will be the most substantial required cost aside from your down payment if you made one, but you’ll still see many itemized expenses related to the process of obtaining a loan. The VA has restrictions on which of these costs veterans are responsible for, but typically, expect to pay for:
Credit report retrieval
Flood or hazard insurance premiums
The VA protects borrowers from excessive costs by explicitly describing situations in which these above expenses are and are not the responsibility of the borrower. The VA also ensures that lenders and other necessary parties do not overcharge borrowers beyond the actual cost. However, lenders can charge a single 1% fee to account for any additional service charges above the cost of service.
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