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You’re a veteran or active-duty member, and you would like to get some cash out of the equity in your home. Might I suggest the VA Home Loan Refinance benefit?

                The VA offers a Cash-Out Refinancing Loan that allows you to refinance and get some money out of your home while still using the VA home loan guarantee. Although these loans were not as popular just a little while ago, they’re coming back because of changes in legislation. The Veterans’ Benefits Improvement Act of 2008 has added many improvements (hence the name of the bill) that can save you up to $20,000 more than before.

                One of the best reasons to get a VA Cash-Out Refinance is that you can use the money any way you want. Some lenders may have limitations on what you can spend the money on, but the VA itself does not. You can use it to pay off debt, go on vacation, pay for college, buy a new car, make improvements on your home or whatever else you need. As for how much you can take out, the recent legislation increased the amount from 90% of your home’s equity to 100%, which is another reason the VA Cash-Out Refinance is coming back. Below are some of the aspects of the loan. There are more, but I’ve highlighted the ones that seem to raise the most questions:
  • A Cash-Out Refinance Loan from the VA must hold the first lien on the property. This means that if you have any other liens on the property they will most likely have to be paid and financed into the loan.
  • The VA requires that you are the primary occupant of the property. This means that you cannot use this loan on a rental property or for someone else.
  • The lender will require an appraisal, credit report and income verification to take a Cash-Out Refinance Loan.
  • You must have your entitlement to get a Cash-Out Refinance Loan from the VA.  If your entitlement is tied into the loan that you are refinancing, then it will be restored and renewed with your refinance. However, if your entitlement is tied up in another property, then you have to wait until the other property loan is paid off and your entitlement is restored.
            Whatever your reason for wanting to get some cash out of the equity in your home, a VA Cash-Out Refinance can help you simply because it saves you money. Talk to your lender or regional VA office — they can answer any of your specific questions that you might not find on a Web site. If you’ve been hoping for that car or new addition to your home and just needed the funds, this could be your ticket.
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