VA Cash-Out Refinance Guidelines Update On VA Home Loans

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This ARTICLE On VA Cash-Out Refinance Guidelines Update On VA Home Loans Was PUBLISHED On August 21st, 2019

VA Cash-Out Refinance Guidelines
Gustan Cho Associates

UPDATE On VA Cash-Out Refinance Guidelines By The U.S. Department Of Veterans Affairs:

  • Gustan Cho Associates Mortgage Group have breaking news regarding VA refinance mortgages
  • There has been an announcement restricting the loan-to-value guidelines
  • In this article, we will detail the new guideline and what sparked this change
  • This announcement from GINNIE MAE came out earlier this month

In this article, we will cover and discuss the VA Cash-Out Refinance Guidelines recently released by the VA.

VA Cash-Out Refinance Guidelines With Changes In Loan To Value

what are the VA Cash-Out Refinance Guidelines With Changes In Loan To Value

The U.S. Department of Housing and Urban Development (HUD) has stated that VA cash-out refinance mortgages will now have a loan-to-value cap 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).

Old Rules On VA Cash-Out Refinance Guidelines

what are the 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 mortgages
  • 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 repeat use
  • 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 it 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

what is the 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 capped at 90%.

  • 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%
  • This is to prevent Americans from equity stripping their property
  • 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.

Uncertainty In The Economy and Global Markets May Impact Housing Markets

If there is 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 statutory changes

Review of economic growth, regulatory relief, and consumer protection act of 2019 sparked these changes.

Changes In Mortgage Guidelines

what are the 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 your refinance is 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 on CASH-OUT REFINANCING.

Qualifying For VA Loan With A Direct Lender With No Lender Overlays

How 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. Gustan Cho Associates are experts in VA mortgage financing. We have the capacity to get your cash-out refinance closed 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 call Mike Gracz at 630-659-7644 or send an email to mgracz@gustancho.com. We look forward to helping you with your mortgage needs!

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