VA Cash-Out Refinance Guidelines On VA Loans
We will be covering the updated VA cash-out refinance guidelines on VA loans. GCA Mortgage will be updating our viewers on updated news regarding VA refinance mortgages. There has been an announcement recommending the loan-to-value guidelines and no longer having a maximum loan limiit on VA loans. In this article, we will detail the new guideline and what sparked this change. This announcement from GINNIE MAE came out earlier this month.
VA Cash-Out Refinance Guidelines With Changes In Loan To Value
The U.S. Department of Housing and Urban Development (HUD) has recommended that VA cash-out refinance mortgages have a 90% LTV cap on cash-out refinance. However, the LTV cap on VA loans is still at the loan-to-value at 90%. This means you may only have a load in now that is 90% of the value of your property. Example. If your home is worth $200,000, the maximum loan amount is $180,000 (including the VA funding fee). Gustan Cho Associates still does 100% LTV on VA cash-out refinance mortgages.
Old Rules On VA Cash-Out Refinance Guidelines
This is the second time the U.S. Department of Housing and Urban Development has changed, the loan-to-value restrictions for VA cash-out refinance mortgages this calendar year. The first change came back on February 15th, 2019. At that point, they changed it from the old rule. The old rule for any veteran was, they were eligible to finance 100% of the appraised value of their home PLUS their funding fee. Meaning a veteran could have a combined loan-to-value (CLTV) of 103.3%. Owing more than your house is worth is not the best position to be in. That is why earlier this year, the VA put new loan-to-value restrictions on VA cash-out refinance mortgages.
VA Lenders Who Do Cash-Out Refinance Mortgages up to 100% LTV
The rule change earlier this year allowed a veteran to have a combined loan-to-value of 100%. Meaning they could finance 100% of the value of their house, but that amount must include the funding fee. The max funding fee is currently set at 3.3% for the repeat user. If you receive service-related disability, under the old guidelines, you could still cash out up to 100% loan-to-value. If you still need to complete a cash-out refinance at 100% LTV, you must fund this mortgage loan before September 30, 2019. That means you must close on or before 9/25/2019. See our article on the OLD VA, CASH-OUT RULES.
NEW LOAN-TO-VALUE VA Cash-Out Refinance Guidelines
For any VA cash-out mortgage funding after September 30, 2019, the max combined loan-to-value is recommended at 90% LTV. Why did this rule go into effect? It seems as if major mortgage agencies such as HUD, FREDDIE MAC, and FANNIE MAE are preparing for a housing bubble. Just a few weeks ago, HUD changed FHA cash-out refinance guidelines. They change the max loan-to-value from 85% down to 80%. We are now seeing the same change with the VA mortgage going from 100% down to 90% overlays by many VA lenders. This is to prevent Americans from equity stripping their property.
UPDATED VA Cash-Out Refinance Mortgage Guidelines
If there is another economic downturn, this will help more Americans from going underwater with their mortgages. The term underwater means you are more than your house is worth. When that happens, families feel stuck with no option to sell. At that point they are the only option to move is a short sale, deed-in-lieu, foreclosure, or bankruptcy. While lowering the loan-to-value restrictions sounds like a punishment, it is put in place to protect American families. One important thing veteran borrowers need to realize is there are still mortgage companies like GCA Mortgage that will go up to 100% LTV on cash-out refinance mortgages on VA loans.
Uncertainty In The Economy and Global Markets May Impact Housing Markets
Many experts blame the turmoil in the global market, and some have stated, we are soon to enter into a recession. While the economy is high overall, there is a lot of uncertainty. American families learned many hard lessons in the real estate crash of 2008. These little changes are put in place to help minimize those casualties. On July 25th, 2019, President Trump signed the Protecting Affordable Mortgages for Veterans Act of 2019 into law. This put a revision on loan seasoning requirements and Jenny May’s statutory changes. Review of economic growth, regulatory relief, and the consumer protection act of 2019 sparked these changes.
Changes In Mortgage Guidelines
As you can see from this single article, mortgage guidelines are ever-changing. Little updates like this could be the difference between a cash-out refinance making sense for you and not qualifying for the loan. Thousands of Americans use cash-out refinance mortgages to hit the reset button on their financial picture. Many clients utilize the equity in their property to pay off high-interest consumer debt. This can save your family hundreds, even thousands of dollars a month. Others use the equity in their property to complete house renovations. That 10% loan-to-value change can change you’re refinancing in dramatic ways. It could be the difference between paying off your high-interest consumer debt to not having the equity to refinance. Click here for more information about CASH-OUT REFINANCING.
Qualifying For VA Loan With A Direct Lender With No Lender Overlays
As stated above, this guideline change has a hard deadline of September 30, 2019. The Gustan Cho Associates are experts in VA mortgage financing. We have the capacity to get your cash-out to refinance closing and funded before September 30, 2019. However, this time window is closing quickly. We appreciate those who served our country to protect our freedom! This is why we offered VA mortgages with zero LENDER OVERLAYS. We are available seven days a week to answer any mortgage-related questions. Please contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at [email protected] We look forward to helping you with your mortgage needs!
VA Cash-Out Refinance Mortgage Guidelines On VA Home Loans
UPDATED VA Cash-Out Refinance Mortgage Guidelines:
- Gustan Cho Associates are experts in VA mortgage financing
- We help many Veterans purchase and refinance homes each and every year
- Most of the time a VA loan will be the best loan available for the brave Americans who fought for our country
- VA mortgages do not require a down payment, do not have monthly mortgage insurance, and typically have lower interest rates compared to conventional financing
- In this blog, we will focus on how to utilize your VA benefits to refinance your home
- As interest rates have dropped, the refinance market is booming
In the following paragraphs, we will cover and discuss VA Cash-Out Refinance Mortgage Guidelines that have been just updated.
Changes On VA Cash-Out Mortgage Guidelines On VA Loans
VA refinance guidelines have changed quite a bit over the past few years. These changes are designed to protect the equity in the veteran’s properties. The old guideline stated a veteran could refinance 100% of the value of their property plus the VA funding fee above and beyond that amount. Meaning your combined loan to value would be 103.3% (CLTV). Last year that guideline was changed where the veteran could still refinance their home up to 100% of the value of the property. However, the funding fee must be included in that 100%.
Notable Recent Changes On VA Agency Mortgage Guidelines
You were no longer able to add the 3.3% repeat use funding fee above and beyond the 100% value. This made sure a veteran does not owe more than their house is worth. The third change to VA cash-out refinance guidelines came out a few months back. It changed the STANDARD VA cash-out cap to 90% of the value of your property, including the funding fee. This is designed to keep equity in a veteran’s home when completing a VA cash-out refinance. Other agencies such as FHA have also changed their max loan to value limits this year.
HUD Cash-Out Refinance Mortgage Guidelines on FHA Loans
HUD is now capped at 80% loan to value. These rules were put in place by HUD in an attempt to curb inflating home values in an effort to avoid a future real estate crash. However, the lowered LTV on cash-out refinance mortgages was a temporary one due to the coronavirus outbreak and uncertainty of the mortgage markets. Most VA lenders still have a 90% LTV limit on VA cash-out refinance loans. However, Gustan Cho Associates is still offering VA cash-out refinance mortgages with up to 100% LTV.
VA Cash-Out Guidelines Versus Other Loan Programs
- But for GOVERNMENT BACKED mortgages (VA, FHA, USDA) has lowered the max loan to value ratios for FHA and VA mortgages in an attempt to slow down CHURNING
- Mortgage churning is when lenders pressure a borrower to refinance their mortgage over and over again
- This is a predatory practice that often targets veterans
- The churning process begins after a veteran obtains a VA mortgage
After about six months, the veteran is oftentimes bombarded with calls and mailers from lenders pressuring them to refinance their mortgage.
Net Tangible Benefit Guidelines On VA Home Loans
While many times a refinance can benefit the homeowner, there are times when the added fees put the veteran in a worse financial position. If you find yourself refinancing over and over again, the fees added to the principal balance of your mortgage will hinder you from paying your principal balance off. Remind me veterans can be lured into completing the refinancing the short-term benefit versus the long-term consequences. Lowering the max loan-to-value ratio cap will lower the amount of Churning in the mortgage business. Just one-way Ginnie Mae is helping protect our veterans.
100% VA Cash-Out Refinancing
Is 100% VA Cash-Out Refinancing still available through the VA? While Ginnie Mae has put a 90% LTV cap on STANDARD VA Cash-Out Refinances, there is a secondary program that still allows 100% loan-to-value. Ginnie Mae has a secondary pool on the mortgage-backed security market which still allows 100% LTV VA cash-out refinances. This is not as highly advertised as the 90% cash-out cap, because this should only be used in critical situations. A veteran looking to use this extra 10% LTV needs to know they will pay a HIGHER interest rate. A higher interest rate is put in place to defer someone from using this program. Since Gustan Cho Associates is a mortgage lender without LENDER OVERLAYS, we do offer this 100% LTV VA cash-out program.
Major Positive Changes On VA Mortgages
As always, Gustan Cho Associates strive to keep you up to date on the ever-changing mortgage guidelines. It looks like some more major changes are on the way for 2022. The U.S. Department of Housing and Urban Development has already announced the removal of loan limits for VA mortgages. Effective 1/1/ 2020, VA mortgages will no longer follow the conforming loan limit before they require a down payment. We are waiting to hear more details but at this time it looks like veterans will be able to buy more expensive homes without a down payment. In order to fund this, the VA will be raising its funding fee at the beginning of the year. The VA funding fee is the engine that keeps VA mortgages around. The funding fee is not out of pocket but is financed into your mortgage.
Qualifying For VA Mortgages With A Direct Lender With No Lender Overlays
Gustan Cho Associates is a full-service mortgage lender that offers hundreds of loan programs that many lenders do not have available. We have everything from no overlay mortgage lending, to DOWN PAYMENT ASSISTANCE, to NON-QM mortgage products. We are available seven days a week to help with your mortgage needs. Please call Mike Gracz on 630-659-7644 to start your one-on-one consultation. Either Mike Gracz or one of the highly-skilled loan officers on the Gustan Cho Team will assist you!