100% Cashout Refinance VA Loan

va cashout refiThe VA home loan is one of the very few, if not only, loan programs that allows for 100% financing. But what many Orange County Veterans eligible for a VA loan don’t realize is that it also allows for refinancing to 100% loan to value. And even better, it is possible to get “cash out” up to 100% loan to value, up to the local county loan limit. This means that in Orange County, if a Veteran owns a home that is worth the VA county loan limit of $679,650 (in 2018) then he can refinance up to that loan amount. And the loan being paid off does not need to be a VA loan.

Why Would Someone Want to Refinance to 100% Loan to Value?

Refinancing is not for everyone. And pulling equity out can be dangerous, depending on the purpose of the refinance and the strength of borrowers qualifications. But there are plenty of reasons why this is a viable option for some.

  • Home Improvements – It’s not easy to get a construction loan these days. And even if you can get a construction loan it will typically come with restrictions on disbursements to contractors, high costs, etc. With VA, if there is any equity at all you can access it and without restrictions on its use.
  • Debt consolidation. For those home owners who have debts that are holding them back, being able to refinance and consolidate those debts into one loan can suddenly free up cash flow. For those looking to consolidate debt, a smart plan would be to look at using some of the monthly savings to accelerate the principal pay down on the new mortgage after building up a solid emergency reserve account.
  • College expenses. Kids grow up fast. And college is more expensive than ever. Using built up home equity is just another way to help pay tuition without dealing with student loans. Mortgage rates do tend to be lower than student loan rates.
  • Investments. For some, it may make sense to pull equity out for other investments. Hopefully, safe investments.

What to Consider when Refinancing

There are several important considerations when refinancing.

  • How long do you plan to remain in the home and/or loan? With any refinance you want to make sure you “break even” before you are out of the home or loan. Many times a VA refinance can be closed with the lender covering closing costs with a “lender credit”. However, unless you are a disabled Veteran qualifying for a Funding Fee waiver, then expect a full Funding Fee of 3.3% to be tacked onto the back end of the loan. If your plan is to sell the home soon, then a VA cashout refinance may not make sense.
  • What is your current interest rate and how much cash are you trying to pull out? Depending on current rates, it may or may not make sense to get a new 1st mortgage. For example, someone who has a 30 year fixed rate of 3.25% may not want to give that rate up, especially if they really don’t need much cash. Maybe an equity line 2nd is a better option.

Find out if a VA Refinance is Right for You

The best way to find out if a 100% VA cashout refinance is right for you is to talk to a VA loan officer who should be able to provide custom loan scenarios with details on the new loan amount, payment, closing costs (and any lender credit to offset closing costs), and amount of cash out. The loan officer should also be able to provide a Side by Side Analysis of your current loan to the new VA loan and other possible refinance solutions.

Authored by Tim Storm, a California VA Mortgage Loan Officer MLO 223456 – Please contact my office at the Home Point Financial NMLS #7706. Direct line at 949-640-3102. www.OrangeCountyVALoans.com

VA Refinancing Options For Eligible Orange County, CA Homeowners

Orange County VA Loan ApprovalVA mortgage loans allow eligible Orange County Veterans to refinance their home to take advantage of lower interest rates that can ultimately save you sizable sums of money in both the long-run and the short-run by lowering your monthly payment. What many don’t realize is that the current loan does not need to be a VA loan.

Many Orange County home owners are finding that if they currently have a Conventional loan, they can refinance into a VA loan if you are an eligible veteran or member of the armed services. Transferring from a Conventional mortgage to a VA mortgage is known as a “Conventional to VA Refinance Loan” and is a very straightforward process. Technically, VA considers a refinance from a non-VA loan into a VA loan to be “cash out”, even if the borrower is not getting cash back. And while many lenders will only allow a Conventional to VA refinance up to 90% of the properties value, there are lenders who closely follow VA guidelines and allow for 100% loan to value financing. In Orange County, where the VA 100% financing limit in 2013 is $668,750, this opens a lot of possibilities. And don’t forget, many lenders will finance up to a $1,500,000 VA loan. Some equity is required when the loan is greater than the 100% limit, but not as much as would be required for a “Jumbo” Conventional loan.

The “Conventional to VA Refinance Loan” process is described in detail in our article Can I Qualify For A VA Refinance If I Currently Have A Conventional Loan?

A common question related to VA refinancing is whether or not you combine a Conventional 1st mortgage with an equity line or fixed rate second mortgage. The answer is…you can! Even if the 2nd is greater than 100% of the properties value it is still possible to combine a portion of the equity line with the first mortgage and “subordinate” the remaining 2nd mortgage. There are loan to value restrictions in this scenario, typically capping out at 115% of the properties value.

VA IRRRL for Orange County Homeowners

Of course, you are also allowed to refinance your home if you currently have a VA mortgage. An Interest Rate Reduction Refinance Loan (IRRRL) is also known as a VA Streamline Refinance.  This is a fast and easy way to lower your monthly mortgage payment and interest rate! And typically with the lender using a “lender credit” to cover some or all of the closing costs.

Some of the benefits of a VA Streamline Refinance or IRRRL include:

  • In most cases you will not need to have an appraisal prepared. This saves time and cost.
  • No income verification. Remember when you purchased your home and had to provide two years income documentation, paystubs, first born and a pint of blood.( Just kidding.)  The IRRRL program is “streamlined”, meaning its a very easy process. The lender will verify you have a job, but does not ask for income documentation. As a matter of fact, the income section of the loan application is left blank.
  • An extremely low VA Funding Fee – only 0.5%. And in many cases the lender can provide a loan scenario where even the VA Funding Fee is covered with the “lender credit.”

Consult with an Orange County, CA VA Loan Specialist

It is important to make sure to talk with a VA loan specialist. VA financing tends to be specialized.  The guidelines for VA financing are much different than for Conventional loans, and consulting with a loan officer who is not familiar with VA financing may result in answers that are not correct. So make sure you are getting the correct answers to your questions when it comes to VA financing.

2011 VA Loan Limits for Orange County, CA Good Through December

The 100% VA financing loan limit in Orange County, CA for 2011 is $700,000. The limit is typically changed, either up or down, at the end of September of each year. And while Fannie Mae, Freddie Mac, and FHA loan limits in Orange County will all be dropping from $729,750 down to $625,500, the Department of Veteran Affairs announced the VA loan limits will be extended through the end of 2011.

How Does This Effect the Maximum VA Loan Limit?

It is important to note that there is not a “maximum” VA loan limit. There IS a maximum “guaranty” provided by VA for loans meeting VA guidelines. In Orange County, a Veteran can still purchase a $700,000 home with no down payment. If the Veteran or Active Military wants to purchase a home for more than the 100% limit ($700,000), then a down payment is required. The down payment is equal to 25% of the difference between the $700,000 VA 100% financing limit and the higher purchase price. For example, if the purchase price will be $800,000, then the down payment required would be $25,000, or 25% of the difference between $700,000 and $800,000.

While there is not a maximum “loan limit”, most lenders will not lend above $1,500,000. Still, the VA program has provided a great way for Veterans to refinance their Convention loan to a low 30 year fixed rate, even when they have lost equity in their home. A “Jumbo” 30 year fixed rate is typically .75% to 1% higher than the going VA 30 year fixed rate.

Will the 100% Financing Limit in Orange County go Up, or Down, in 2012?

The Veteran’s Benefits Improvement ACT of 2008 provided a temporary increase in 100% VA financing limits for loans closed from January 1, 2009 through December 31, 2011. In 2008 the limit was only $417,000. In 2009 the limit increased dramatically to $737,000 in Orange County. In 2010 the limit dropped to $593,750, and in 2011 went back up to $700,000. Right now it is tough to tell what will happen with the VA loan limit. It most likely won’t go up. Based on what is currently happening with the Fannie Mae/FHA loan limits, the better guess is loan limits will drop. But how far? We should have a better idea within the next few months.

Veterans Purchasing Luxury Homes in Orange County Should Act Now

Because of the uncertainty regarding the Orange County 100% financing VA loan limit, Veterans who are considering a purchase of a home greater than $417,000 should get serious about finding a home before the end of 2011. The first step in determining eligibility and qualifications is to contact an Orange County Direct VA lender. The lender should be able to quickly retrieve your Certificate of Eligibility, as well as provide customized loan scenarios which will give the Veteran the details of a transaction that are needed when planning for a large financial event.

Authored by Tim Storm, an Orange County, CA FHA and VA Loan Officer – Please contact my office at Home Point Financial for more information about an Orange County, CA home loan. 949-640-3102.  MLO 223456

 

Contact us for your Orange County VA Mortgage:

Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.

tstorm (at) ochomebuyerloans.com

 

VA Loan Cashout Refi for Orange County Borrowers

Orange County homeowners with a VA loan are finding there are big advantages to the VA Cashout refinance program. This program actually does not require the loan being refinanced to be a VA loan, as long as the borrower is eligible for a VA loan.  The biggest advantage of this program over most other cashout refinance programs is that the borrower can borrow money up to 90% of the properties value, while a Conventional loan allows cashout up to 80% loan to value, and FHA allows cashout up to 85% loan to value.

What is the Difference between a VA IRRRL and a VA Cashout Refi for Orange County Borrowers?

Orange County borrowers need to keep in mind a few of the differences between the popular IRRRL, or VA Interest Rate Reduction Refinance Loan,  and a VA Cashout refinance.  The IRRRL program is strictly a “Rate and Term” refinance, and the current loan needs to be a VA loan. Also, income is not verified, and in most situations, there is no appraisal. (Although there have been some changes to the appraisal requirements and some lenders are tightening up this program.) The VA considers any refinance that is not an IRRRL to be a cashout refinance. This means that if an Orange County VA eligible borrower wishes to refinance from a Conventional (Fannie Mae or Freddie Mac) loan, then even if they will not pull cash out, VA still considers it a cashout refinance and it must be underwritten as such.

VA Loans Are Flexible with FICO Scoring

Another big advantage for a VA cashout refinance versus a Conventional cashout refinance is the relative flexibility towards FICO scoring. For VA eligible borrowers with FICO scores under 700, if may make more sense to go with a VA loan even you only plan to pull cash out to 80% loan to value. Fannie Mae and Freddie Mac have instituted pricing “addons” which increase the fees and rate for cashout refinances when the FICO scores drop below 740. If your score FICO drops below 700, the pricing hits really start to add up. With VA, the pricing hits for low FICO’s are minimal.

VA Guidelines Regarding a Cashout Refinance

The actual VA guidelines allow for cashout to 100% loan to value, but finding a lender who will allow this will be difficult. Lenders tend to stay with the 90% rule, although there is some flexibility if the borrower is not actually getting cashout and the loan to value is over 90%. This is something that should be reviewed by an experienced Orange County VA loan officer prior to paying for an appraisal.

Authored by Tim Storm, an Orange County, CA Loan Officer MLO 223456– Please contact my office at Emery Financial Group for more information about an Orange County, CA home loan.  877-786-4243 x 7.

www.OCFHALoans.com

Contact us for your Orange County VA Mortgage:

Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

 

Orange County, CA VA Streamline Refinance

VA IRRRL in orange countyOrange County, CA VA borrowers can take advantage of the VA Streamline Refinance program, also known as the IRRRL, or Interest Rate Reduction Refinance Loan. With rates still low in 2018, borrowers have been lowering their payments without needing an appraisal or even needing to qualify for the loan.

How Does the IRRRL Help Orange County, CA VA Borrowers?

The IRRRL was created to help those who have served our country be able to finance their homes at the best terms possible. With this program there is none of the following.

  • No Appraisal
  • No termite inspection
  • No credit qualifying

The loan must be current with no more than 1 30 day late within the most recent 12 months. This program is available to Veterans who purchased their home with a VA mortgage or refinanced into a VA loan at some point. There is more than one way to do a VA Streamline Refinance. You can either go for the lowest rate possible and add closing costs into your loan amount, an option that may make sense when you are planning to stay in your home long term. The other option is to go for an interest rate that would allow for the lender to cover some or all closing costs on your behalf. The best idea is to review all options and decide which scenario works best for your individual situation.

Rates are Low. Should I Definitely do a VA Streamline Refinance?

Just because the rate you can get with a VA Streamline is lower than your current rate doesn’t mean it refinance to va loanautomatically makes sense to refinance. You need to look at the monthly savings a refinance will create and make sure the costs involved in the streamline refinance do not outway the savings. For example, if you’re being told it will cost more than 3 points to get that great, low, advertised rate, the costs may end up being too high that they defeat the whole purpose of refinancing. Also, when a lender tells you that you will “skip” a payment or two, understand that you never “skip” mortgage payment. VA does not allow lenders to advertise “skipping” payment, and yet many VA IRRRL mailers still advertise it. What is actually happening if you feel like you are skipping a payment is that the interest for the payments not being made is added to the new loan. This may be something some VA borrowers want to do, but it is important to understand all of your options. Make sure that the lender you are working with has your best interests in mind.

Authored by Tim Storm, an Orange County VA Loan Officer specializing in VA Loans. MLO 223456. – Please contact my office at the Home Point Financial. My direct line is 949-640-3102. www.OrangeCountyVALoans.com. I will prepare custom VA loan scenarios which will be matched up to your financial goals, both long and short term. I also prepare a Video Explanation of the your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process.