Streamlining a VA refinance means that there is minimal documentation required and the need for an appraisal is eliminated. There is also no need for income and employment verification and no credit score is required. In short, the process is made so much quicker.
However, if you are planning on getting some cash out when refinancing, streamlining the refinance process in not possible. A VA Cash-Out Refinance requires paperwork and home appraisal. Pulling out cash in a VA Streamline Refinance is simply not allowed.
Cash-Out Refinance, How Much Money Can I Get?
The Veterans Affairs has not established a maximum loan amount a borrower can lend. But, it can only guarantee up to 25 percent of the loan. The lender who provides the loan funding may set a maximum amount which may be equal to that of conventional loans.
In a cash-out refinance, maximum loan amount must not exceed 100 percent of the property’s new appraisal value. However, since VA only guarantees the loan, the VA-approved lender may cap this amount to 90 percent of the home value.
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Is a VA Appraisal Necessary?
The home has to go through a property valuation. This will be performed by a VA-certified appraiser. This process will be requested and scheduled by the VA lender, should you wish to do a cash-out refinance. Through an appraisal, the lender will be able to determine the house’s new fair market value.
This should be the basis of the amount the borrower can borrow. While the maximum loan amount is up to 100 percent of this new appraisal value, the borrower can opt to get a loan that is lesser than 100 percent.
The cost of an appraisal varies by state and by the type of property. In general, the average appraisal plan would cost around $300 to $500.
Your credit needs to be pulled out and reviewed. The VA does not require any credit score in order get VA financing. The VA lender, however, may require a credit score of 620. Some lenders may even ask for a score that 680 or higher.
Income and Employment Requirements
The main purpose of requiring this is to determine whether the borrower has enough income and assets to pay for the loan, while still affording to pay other obligations.The borrower needs to provide pay stubs for the most recent 30 days. The W-2 and the federal income tax return within the last 2 years will also be asked. All those whose names appear on the loan application will also go through a verification of their monthly income.
The Cash-Out Refinance is one of the two popular refinancing options under the VA. The other one is the IRRRL, which is VA’s streamline refinance. Learning about this other option will help you make better decisions. You may visit the
VA website and read about these refinance programs. You may also talk to a lender and direct your questions to them.
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