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VA Home Loans are eligible for both streamline refinance and a standard refinance. A VA streamline Refinance/IRRRL or Interest Rate Reduction Refinance Loan is a VA program that has minimal requirements. When obtaining this loan you need minimal documentation such as no income documentation, no employment verification and no credit score is needed. The process is streamlined making it easy to get for those reasons. If the borrower ends up wanting to talk out cash from the refinance then the streamline option is no longer available. This option is now called the VA Cash Out Refinance.
For VA Cash Out Refinance the maximum amount that can be represented is no more than 100% of the property’s value. This value is determined by reviewing a new appraisal on the property. Even though with a VA loan letting you do an option like cash out refinance that doesn’t mean that all lenders will do this program. Most VA lenders will not go over 90% of the home value.
With a VA Cash Out Refinance you need evidence of both income and employment. You can verify this by providing pay check stubs, within a 30 day period. You must also provide W2 forms from the previous two year’s federal tax returns. You have to provide this so the lender can determine if you have sufficient funds to cover the VA cash out refinance payments and other monthly payments that you have accrued such as car payments, student loans, or credit card payments.
There is not a set minimum credit score but most lenders like a score of at least 620 although like said before it is not set it stone. Some like it to be higher than 680 and above but others will have a different number. It is important to shop around with a few different lenders for this reason.
Considering VA Cash Out Refinance
All VA Cash Out Loans require an appraisal because the maximum loan amount is based upon the appraisal amount of the home. After the appraisal is done the lender will determine the loan amount based upon the inspection. Just remember even though you can accept the full loan amount, if you don’t feel like you need that much you do not need to take out such a large loan. The key thing is to communicate your wants and needs with your lender.
When Considering getting a VA Cash Out Refinance loan, be aware of the funding fee with can be as much as 3.15% of the loan amount. Talk with your lender to make sure this loan will truly benefit you and if there is another option that would work better with a loan you are looking for.