VA Loan – Is Cash Out Refinance Possible?

Existing VA mortgage can be refinanced. The VA home loan scheme is eligible for both standard as well streamline refinance options.

The Streamline option

VA Streamline refinance program is also known as Interest Rate Reduction Refinance Loan. This refinancing program doesn’t require any kind of appraisal and asks for minimal documentation from the client (borrower). 

The VA Streamline Loan Program never asks for any employment verification, income documentation, or credit score report. The process is perfectly streamlined. However, if the borrower tries to pull out any additional cash amount from refinancing (VA Cash Out Refinance), this streamlined process becomes inapplicable. 

The requirements for VA cash out loan

VA loan schemes don't come with any specific set of the amount. However, there is a specific amount range up to which the VA would act as guarantor. The VA guarantees 25% of the total VA loan amount, with the condition that the loan amount must not be greater than $200,000. 

Does VA allow cash out refinance?

Yes, but with a clause: the total loan amount to be sanctioned under the cash-out refinance scheme should not be more than the property’s present day valuation. The valuation part is determined through reviewing of a new appraisal on the property.

Although VA allows Cash Out Refinance, that doesn’t imply the fact that the lenders would be ready to do so. Most of the lenders have a tendency to cap maximum loan amount equivalent to 90% of the home valuation cost, irrespective of the VA limit. 

Although VA Streamline Refinance scheme doesn't ask for any major documentation in regards to employment or income, the CASH OUT REFINANCE scheme requires both these documentations from the borrowers. The verification procedure gets completed initially once the borrower providers attested copies of bank pass book duly updated.