VA Cash-Out (Debt Consolidation)
VA Home Loan Cash-Out Refinance
If you are a veteran with conventional, FHA or other type of home loan, you can refinnce using a VA loan. This type of refinancing falls under the heading of a cash-out refinance: and depending on your needs, you can do one of two kinds of VA home loan cash-outs.
With the first type of cash-out, you do not actually receive funds through the refinance. When you make the changeover from a conventional, FHA or other loan to a VA loan, you do so to lower your monthly mortgage payments and avoid a monthly mortgage insurance premium. The maximum loan to value–which is a calculation of what the property is worth in relation to what the mortgage balance will be–is 90% (with an IRRRL loan, it’s 100%).
With the second type of cash-out, you can use the equity built up in your home to consolidate debt that’s not explicitly mortgage-related or that’s in addition to your existing mortgage.
Home equity debt consolidation has a number of excellent advantages. If you have credit card debt, you can pay it off or down at an interest rate that’s substantially lower than what most credit card companies charge their customers.
This in turn can free up money to help you:
- pay off your mortgage
- do home improvements
- save for a child’s college education
- prepare for your own retirement
Better still, since mortgage debt is usually tax deductible, you’ll be able to write off the interest. This is not possible with consumer debt, which is never tax deductible. You can consult your tax professional or CPA for the details.
VA Cash-out refinance funding fees are dependent upon your status and whether you are a first or repeat loan user. If you are regular military, the VA charges 2.15% of the loan amount for the first loan and 3.35% for all loans after that. If you are a reservist or a member of the National Guard, then the VA charges 2.4% for the first loan and 3.35% for every loan there after.
How VALS Can Help You
Regardless of the type of home loan refinancing you are seeking, the specialists at VA Loan Solutions can help you. We offer complimentary mortgage reviews as our way of thanking you for your service to our country. Reviews allow us to analyze how much you’re paying per month on your current mortgage, what’s available on the market now and what your financial goals are.
After reviewing your situation, even if we determine that refinancing may not be the best option for you, we’ll still monitor your portfolio and advise you when we believe the conditions are right for you to lock in the best rates and save the most money on your VA home loan.
If you choose to refinance with the aim of consolidating debt, we can help you create a strategy that will allow you to not only eliminate consumer debt, but also make the most of your improved cash flow.
At VALS, we are committed to your financial security and success. Count on us for all your refinancing needs.