VA is the only loan type that allows a cash out loan refinance to 100% of the properties
current value. A VA cash out refinance is very different from a VA loan streamline refinance. A VA loan streamline refinance is for borrowers that already have a VA loan and just want to lower their VA loan interest rate to current market rates. This loan does not require a full appraisal in many cases and does not require the borrower’s income documentation to fully qualify. Also, the VA funding fee is only .5% on a VA streamline refinance. A VA cash out refinance is when a borrower wants to take cash out of the equity of their property or a VA borrower that wants to refinance from a conventional or other type of loan to a VA loan. In the case of going from a conventional loan to a VA loan, even if a borrower does not take cash out, it is still considered a cash out loan. With a VA cash out refinance all income documentation is required and the borrower must fully qualify and a full appraisal must be done. Also, the VA funding fee for a cash out refinance is 2.15% for first use and 3.3% if this is your second or greater use of your VA benefits. Remember if you receive any VA disability benefits the VA funding fee is waived.
| VA Streamline Refinance | VA Cash Out refinance | |
| Full income qualification | No | Yes |
| Full appraisal | Not always | Yes |
| Currently have non VA loan | No | Yes |
| Funding Fee | .5% (waived if receive VA disability pay) | 2.15%-3.3% (waived if receive VA disability pay) |
| Max loan-to-value | 100%+ | 100% |
A VA cash out refinance can be a good idea for someone who wants to pay off high interest credit card debt. The benefits are you take high interest credit card debt and you roll it into a very low 30 year fixed VA interest rate. This debt also becomes tax deductible when it is in your mortgage. Also, borrowers with high jumbo loan amounts in many Coastal California areas can benefit from refinancing from a conventional loan ARM or high interest rate to a VA loan because VA allows a very high loan-to-value even on jumbo loans where conventional does not. You can take an adjustable rate loan or high interest rate conventional jumbo loan and refinance to a very low 30 year fixed VA loan. VA loan limits go up to $1 million in San Francisco, San Jose, Alameda, San Mateo and Contra Costa County. And VA loan limits go up to $700,000 in Los Angeles and Orange County, and then $546,750 in San Diego County. You can go up to 100% of those amounts with a cash out refinance. A conventional loan in many cases would only allow 70% of those amounts and have much more strict qualifications.
So I hope this helps you understand the VA cash out refinance in California a little better. If you have any questions about getting approved please call us at 858-922-7899 or email at homeloan8@gmail.com.
Best Regards,
Rob Chomentowski
858-922-7899, homeloan8@gmail.com
Sr. Loan Officer (and VA specialist)
