U.S. homeowners are sitting on a tremendous amount of equity due to the continuing real estate recovery. In fact, nearly $1 trillion in home equity was added to the market last year alone – that’s about $15,000 per homeowner, on average. If you’re looking to tap into that equity and you’re a veteran, a VA loan is the best way to take full advantage.
Conventional loans will only lend up to 80 percent of your home’s total value, leaving tens of thousands of dollars or more locked up. However, with a VA loan, homeowners can convert their full home equity into cash. This is just one of the many benefits offered to veterans, active-duty service members, and their families.
The actual amount of equity you can tap into varies from lender to lender, but the VA will insure veterans borrowers 100 percent on homes valued up to $453,100. Above that, the amount of money you can pull out of your home is based on the maximum conforming loan limits for your area.
Other benefits of a VA loan
VA borrowers can qualify for a home equity loan with a FICO score as low as 680 and a debt-to-income ratio as high as 60 percent. In addition to that, VA loans carry no mortgage insurance, which can greatly increase borrowing power.
According to the VA, a cash-out refinance is for homeowners who want to take cash out of your home equity to take care of concerns like paying off debt, funding school, or making home improvements. The Cash-Out Refinance Loan can also be used to refinance a non-VA loan into a VA loan.
What you need to know
Since private lenders handle the vast majority of VA loans, the rules can change from lender to lender. The Veterans Administration does not get involved in a private lender’s process and the VA does not actually lend money. Instead, the VA “stands behind” the loan in the form of a guarantee, meaning the VA will step in and help the lender in the event of default.
For more information on a VA cash-out refinance, contact us today at (888) 320-7888.
