Home equity is that portion of your home value that you can access in cash. It’s the difference between the market price of your home and the remaining mortgage (and attendant expenses). As a veteran, you may be interested to learn what’s available to you. There’s a lot of grey area in this field, and that’s not what veterans should be faced with, given the exceptional service they have devoted to their country.
So, if you are a veteran (or qualifying individual) who owns your own home, you may be interested to learn what’s possible and what’s not, and that requires separating fact from fiction. There are plenty of myths when it comes to cashing out your home equity, so let’s take a moment to set the record straight. If you want quick ballpark numbers before speaking with a lender, try the VA cash-out refinance calculator.
One of the most pervasive myths pertains to the belief that VA cash app refinancing requires excellent credit. Granted, some loan providers require better credit than others, but that’s not necessarily true across the board. There are other half-truths about down payments, or the length of time it takes to close a VA cash-out refinancing option.
Often, someone who has had a bad experience posts information online or spreads the word, and it is accepted as the truth, hook, line, and sinker. We should set reasonable expectations in this regard. There will always be outliers with these types of loans; however, the industry-standard rules and regulations apply to all authorized VA lenders. Let’s bust some myths, shall we?
# 1 – VA cash-out refinancing is only available to veterans
For the most part, VA cash-out refinancing options are available to veterans, but they’re not only for veterans. It’s also true that these options are available for active-duty service members and qualifying spouses. Your eligibility is often determined by the length and type of service you have provided.
# 2 – You need excellent credit to be eligible for VA cash out refinancing
Veterans and qualified individuals naturally assume that excellent credit qualifies you for these types of options, while mediocre credit disqualifies you. It’s essential to note that some lenders have specific credit score requirements; however, VA loans typically have more flexible guidelines. What does this mean for you? It means that even if you don’t have a perfect credit score, you may still qualify for VA cash-out refinancing.
#3 – A down payment is always needed
The words always and never must be viewed with suspicion. One of the primary benefits of a VA cash-out refinance is that it allows eligible borrowers to access their own home equity without requiring a down payment. This is a significant advantage over other conventional loans. When you apply for a mortgage, you’re almost always guaranteed better rates if you put down a hefty down payment. When the time comes to cash out with a VA loan of this type, no down payment is needed.
#4 – The loan process is an absolute bore
Depending on where you go, the VA loan process can be easy, painless, and seamless, or a little tedious. Fortunately, the top-rated providers streamline the entire process from inception to cash-out. When you show the required documentation, a good lender processes everything efficiently and effectively.
# 5 – VA cash-out refinances are not as good as home equity loans
This is another myth that many homeowners believe to be true. Home equity loans and VA cash out refinances serve different purposes. The former is a second loan that keeps your current mortgage intact. A VA cash out refinance replaces your existing mortgage and can offer you much better terms. The devil is in the details.
#6 – You cannot use a VA cash out for non-housing expenses
Again, this is a nasty rumor making its rounds. These refinancing options can be utilized for various purposes. These include home improvements, education, debt consolidation, or housing-related costs. There are plenty of applications for VA cash out refinancing.
#7 – The funding fee is too high
Let’s break this down: there are always fees of some sort associated with funding a VA cash-out refinance option. But it also varies, and some borrowers may be exempt from these fees. It’s even possible to roll these fees into the loan amount. It’s best to shop around and have the fine print explained in detail.
