This ARTICLE On VA Cash-Out Refinance Mortgage Guidelines On VA Home Loans Was PUBLISHED On November 14th, 2019
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 a 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 this article, we will cover and discuss VA Cash-Out Refinance Mortgage Guidelines that has 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
- FHA 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 efforts to avoid a future real estate crash.
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 which 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
- The 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. Please call Mike Gracz on 630-659-7644 or email firstname.lastname@example.org for more specifics.
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 2020
- 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 their funding fee in 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 who offer 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!