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  • VA Cash Out Refinance

  • Cashing out refers to the refinancing of a loan where the borrowers will take out additional money against their home.

    For example, if a home is appraised at $100,000 and the borrower's outstanding mortgage loan is $60,000, it is possible to enter into an 80% cash-out refinance transaction for a loan of $80,000 (80% of $100,000). The new mortgage of $80,000 will pay off the $60,000 loan and leave $20,000 cash-out to the borrowers.

    What are the benefits of a VA Cash Out refinance?

    By cashing out on your home, you can obtain cash on the value of your own home to pay off existing debts (like credits cards) or pay for upcoming expenses (college), or even get the money to update or repair your home (new siding, new roof). Consolidating debt into one loan can make it feel like a new day.

    The refinance may also provide you with a lower interest rate too if rates are lower today than when you initially got you loan. 

    CASH OUT IS NOT A HELOC (home equity loan)

    While you are taking cash out, a cash out refinance is different from a Home Equity Loan (HELOC). A home equity loan is a new smaller loan. You leave your existing mortgage alone. The cash out refinance you pay off your existing mortgage AND take additional cash in one new mortgage.


    VA loans allow you to take cash out up to 100% of the appraised value of your home. How cool is that? This is a huge benefit over conventional loans, which only allow you to cash out to 80% of the value, and FHA loans which only allow you to take out 85% of the homes value. You can you the money for anything you wish. There are no restrictions.

    Starting Feb 15th 2019. The VA cash out loan will be limited to 100% of the appraised value, including the funding fee, whereas previously, the funding fee could be added on top of the appraised value.

    For example: Assume the appraisal is $200,000. Assume you owe $100,000, your funding fee is the standard 3.3% ($6,600 in this example), and that you wanted to cash out to 100% of the appraisal.

    Under the old rules, this example would give you $100,000 cash back, and you would have a loan of $206,600 (actual loan plus funding fee)

    With the new rules, this example would give you $93,4000 cash back, and you would have a loan of $200,000.


    If you are looking for this type of refinancing, Mortgages Unlimited is your local VA mortgage center that can help make it a new day in your life with a VA program suited to your financial needs. Vererans united makes us all stronger!