If you are like most people, your home is your largest asset. If you have spent a few years in your home during a period in which the housing market is growing, you may even have a significant amount of equity growing in your home. This is money that can be used to finance a wide variety of things and can even be used to make money if it is invested wisely. If you qualify, you may tap into the equity in your home using the VA cash out refinance option available through many lenders.
What Is The VA Cash Out Refinance Option?
The equity in your home is the difference between your home's value and the amount you owe on your home. Equity is often earned in three different ways. These include:
- Purchasing your home below the value of your home
- Paying on the balance of your home over a period of time
- Appreciation of the market value of your home over and above what you owe
When you have equity in your home, it is almost like having money in the bank. Unfortunately, the equity does not do you any good unless you are able to access it. The VA's Cash out refinance loan option allows you to do just that. It allows homeowners, such as yourself, to refinance their current home loan and receive the equity they have in their home back in cash. These loans can be used to receive up to 100% of the actual value of your home.
For example: If your home is valued at $250,000 and you currently owe $180,000 on your present mortgage, you have $70,000 in equity you could use for other purposes. You can refinance using a VA cash out refinance loan, and receive that $70,000 (less closing costs) to use as you see fit.
What Are The Benefits Of Cash Out Refinancing?
There are many advantages to accessing the equity in your home. Some of these are as follows:
Cheap Source Of Capital - Do you need money to pay off high interest debts, invest in a business opportunity, go back to school, or more? When you participate in a cash out refinance, you will be able to secure the money you need, at a rate which will probably be less than any other types of loans you have access to.
You Are Able To Access Capital Even If Your Credit Is Bad - When you cash out the equity in your home with a VA backed mortgage, the lender has two different guarantees. They have your home as collateral, and the government is guaranteeing your loan. This makes you a good investment, even if your credit is not stellar.
The Interest On The Money Is Tax Deductible - Because a VA refinance loan is on your primary residence, you may be able to deduct the interest, as well as some of the closing costs you pay, off of your income taxes.
The VA Refinance Loan Process Is Streamlined - If you already have a VA mortgage, refinancing under this program is often very simple. Even if you are financing a non VA loan, and refinancing under the VA program, the process is usually not very difficult, but it can take slightly longer than a conventional mortgage loan. Just know that this process can vary among lenders.
Refinancing May Lower Your House Payment - Mortgage rates are currently at very low rates. If you are currently financed at a higher interest rate, refinancing may save you money , as well as reduce your house payment, even if you take money out. This will depend on your specific situation.
For more information, you should contact a local mortgage company like Mann Mortgage.