VA cash-out loans come with many uses, no matter your unique situation. You’re sure to benefit from getting your equity out of your home, as long as you’re eligible. Overall, it’s an excellent option to consider when you need a lot of money to fund something important to you.
There are six primary reasons to get a VA cash-out refinance loan. Everything you need to know is in this article, so keep reading to learn more!
1. You Want To Turn a Loan into a VA-Backed Loan
VA-backed loans come with plenty of benefits. Since the VA backs these cash-out refinancing loans, lenders view you as less of a risk. That means they will always give you the loan with much better terms than if you went for a conventional loan.
You won’t have to offer a downpayment, will get better interest rates, and will save you a ton of money throughout the loan term compared to a conventional one. You’ll also benefit from cash from your equity and better loan terms.
Your current loan likely doesn’t have anything to back it up, so making the switch can benefit veterans greatly. If you have a lot of equity in the loan, you also get that as cash, making it much more worth your time.
Overall, if you want better loan terms, then a VA loan is the best way to do it! You’ll be surprised at all the VA loan options open to you— they should all be much better than your current loan.
2. You Want To Fund a Project
Remodeling your home can be expensive. Getting money from your home’s equity is a great option if you don’t have a way to fund your project right now. You don’t need to take out all the money, just what you want for your project.
Many veterans use the cash-out refinance to fund these sorts of projects:
- Kitchen remodels
- Bathroom remodels or additions
- Adding new rooms or storage space
- Installing a deck or porch
- Upgrading the entire home
- Roof repairs
- Other repairs
In short, you can easily use the money from the VA refinance to fund upgrading and repairing your home. Many appreciate this option because they won’t have to move out to experience a new lifestyle. If you’re wondering how to pay for a project, then it’s a great option for you to consider.
3. You Have a Large Expense
Life can be very unpredictable. If you have a large, sudden expense that you need to cover, a cash-out refinance can help. For example, you were in an accident and now have a lot of medical debt you need to get rid of.
A cash-out loan allows you to access the home’s equity in any situation, making it beneficial in various circumstances. You might need to pay for a family member’s schooling or suddenly need a new car after your current one breaks down. There are plenty of financial situations where you need a large lump sum ASAP.
Overall, a cashout refinance can get that money back in your hands for any large expense while giving you better loan terms, among many other benefits.
4. Remove Mortgage Insurance
Mortgage insurance isn’t cheap! If you could get rid of it, wouldn’t you? A VA cash-out refinance loan could let you do exactly that.
VA loans don’t require you to make mortgage insurance payments, so you can greatly reduce your housing costs by going through the process. Even if you don’t take out any money from the refinance, having no private mortgage insurance could save you hundreds each month.
VA loans never come with insurance costs because the lender knows the VA will ensure they get their money if you can’t repay the loan. This guarantee removes the need for mortgage insurance in its entirety.
5. You Want To Consolidate Debts
Next, you can use a VA cash-out refinance to consolidate debts while moving them to a much lower interest rate. You can do this for credit cards, student loans, and more.
The process works by going through the cash-out refinance, then using the money to pay off all your debts. Then, you make the monthly loan payments in a single place instead of remembering when and where to pay several different debts. This feature makes it much more convenient for many people. You won’t pay nearly as much over time due to the low VA loan rates.
Debt consolidation is convenient and smart— making it one of the top reasons someone would use one of these cash-out loans. You’ll have less debt, giving you more financial freedom.
6. You Get More Money Back
You also can access more of your equity with a VA cash-out loan compared to a conventional refinancing loan. The VA loan allows you to access up to 100% of your equity, while other loans limit how much you can receive.
Plus, since the VA loan has better rates than conventional ones, you don’t have to pay as much over time. That means the VA cash-out loan is the better financial option for getting money from your equity. If you need cash, you’ll always be able to access a higher percentage of your equity from a VA lender than a standard one.
In short, you can get more money with access to a higher loan-to-value ratio, or LTV, that VA loans offer you. That’s essential when you have sudden high costs that you need to cover.
Your Money When You Need It
Essentially, a cash-out loan like this allows you to access your equity funds when you need them. The VA can provide it for you no matter why you want the cash. You’ll want to research your options and ensure you’re eligible before applying.
To summarize, you might want to take out a VA loan for many reasons. They cost less over time when compared to conventional loans, so you’ll save a lot of money and can even consolidate debts or fund a remodel.