Cash Out Refinancing Loans

(Lender’s Handbook, Chapter 6, Topic 3)

The loan is limited to 90%* of the amount of the Certificate of Reasonable Value, plus the funding fee and the cost of any energy efficient improvements up to $6,000.

• A cash-out loan may be made to refinance the outstanding balance of an existing mortgage lien, but can also include other debts (The first lien must be included in the refinance).
• The veteran can receive cash proceeds from the loan for any purpose acceptable to the lender.
• Existing mortgage loans or other liens of record may be refinanced whether they are in a current or delinquent status, but refinancing loans are subject to the same income and credit requirements as regular home loans.

Note: The maximum guaranty is $36,000.

*Due to State law, the maximum loan amount may be limited to 80% in the state of Texas if the borrower receives cash proceeds.

OTHER REFINANCING LOANS

(Lender’s Handbook, Chapter 6, Topic 5)

These consist of loans to refinance:

• Construction loans.
• Installment land sale contracts in conjunction with the construction of a new home.
• Loans assumed by veterans at interest rates higher than the proposed refinance.

These loans (which may exceed 90% of value) are similar to cash-out refinances in all aspects, except the loan amount may not exceed the lesser of:

• the VA reasonable value, or
• the sum of the outstanding loan balance plus allowable closing costs and discounts.