A reader question came in recently asking about the possibility of getting a VA cash-out refinancing loan for a home that did not currently have a mortgage. In light of that question, here’s some detail on the VA Cash-Out Refinancing Loan program that answers that question and many others.

Borrower Benefits

According to VA literature from the Phoenix Regional VA Loan Center, “You can get cash back and obtain a loan for 100% of the current appraised value” of your home. Qualified borrowers are permitted to get cash out on these refinancing loans even if they don’t have equity in the property, “As long as you do not exceed 100% of the  current appraised value.”

Types Of Loans Eligible To Be Refinanced With VA Cash Out Loans

Qualified borrowers may refinance an existing VA, FHA, or conventional mortgage loan, or “any other additional debt that may exist on the property.”

Occupancy Rules

VA home loan rules require occupancy for most loan products including the VA Cash-Out Refinancing Loan. This type of loan should not be confused with a VA Interest Rate Reduction Refinancing Loan, which requires borrowers to simply certify the property was the primary residence during the original loan.

VA Cash Out Loan Appraisal Rules

The Department of Veterans Affairs requires a new appraisal for cash-out refinancing loans.

Cash Out Rules For Existing Liens

The VA loan rule book requires borrowers to have an existing lien on the property in order to get a VA cash-out loan. Borrowers are permitted to apply for a VA cash out refinancing loan on assumed properties, “As long as you have title to the property you can refinance an assumed loan. Check with your lender as there are some additional regulations concerning assumed loans.” Borrowers may also apply for cash out refinancing loans on “wrap” or Contract For Sale loans, but as with refinancing for loan assumptions, the VA urges borrowers to check with the lender first as there are additional regulations which may apply in these cases.

Cash-Out Refinancing On Properties With Second Liens

According to the Phoenix RLC literature for cash out refinancing loans, “You can pay off any existing liens, as long as new the loan amount does not exceed 100%  of the appraised value of the property.” The same is true for “other debts”.

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