VA Cash Out Loans
The VA Cash Out Loan program allows a Veteran complete a VA Cash Out Refiance Loan to borrow up to 100% of their home’s value with a VA cash out refinance. Veteran’s may want want to pull cash out of their homes for a number of reasons, and are able to take advantage of a cash out loan when it makes financing sense to do so. Many Veterans have consolidated debt, opened businesses, purchase additional properties, and paid for a number of different items with a VA Cash Out Loan. With the VA Cash Out Loan A Veteran can turn the equity in their home into cash.
A Veteran can use the VA Cash Out loan to refiance many different loan types, the first loan on the property does not actually have to be a Veteran Loan to take advantage of the low rates the VA program offer. A qualified veteran can refinance an USDA, Conventional, FHA, Veteran Loan, or whatever regardless of loan type.
A Veteran Cash Out Loan can really help a person that is carrying credit card debt as well if the borrower looks to refinance a loan and wipe out their high interest credit cards with a much lower rate through a VA Refinance Loan.
Take for an examples lets say we have a client has the following scenario
The Current Market Value is at $300,000
Current Mortgage is for $225,000
The Interest rate is at 4.5%
With 26 Years Left of a 30 year term
The Current Payment For Principle And Interest is $1,182.82 the taxes and insurance are $274 a moth the total payment is $1,456.82
The clients also had 30,000 in credit card debt and the minimum monthly payment added up to be $974.00 per month.
The clients also had a car loan at 8% interest at 553.00/month at 30k owed
Lets Look At Monthly Cash Flow
$1,456.82 PITI
974.00 Total Other Debt
533.00 Car Payment
___________________
$2,963.52 Total Cash Out Each And Every Month
Now lets propose what it would look like to consolidate the debt with a VA Cash Out Loan and put all of the debt onto one payment.
The Current Market Value is at $300,000
New Proposed Mortgage $300,000
New Interest Rate- (Lets Say The Rate Even Went Up to a 4.625%
Lets Add $5,000 For Closings Costs
And Event The Highest VA Funding Fee For Subsequent Use at 3.3% $9,405
New 30 year term
No Other Debt- We pay off the car, and the 30k in credit card debt.
So even with financing closing costs and the VA Funding fees the total monthly Payment would be at 1,542.42 plus the Taxes and insurance of 274= for a total payment of $1,816.42
$2,963.52-$1,816.42 . The Va Cash Out Loan Saves A Ton Of Money Overall . $1,147.10
So after paying off all debts, consolidating all debts to one monthly payment the new payment would save the veteran $1,147.10 a month just in minimum monthly payments.
If that extra $1,147.10 was reapplied to the principle of the loan each and every month, then the person could be debt free in 12 years. We took screen shoot of bank rates amortization chart below to show what it would look like to let your money work for you much hard then it it is right now. In this scenario if we did a cash out refiance loan even though the interest rate is going up, and there was closing costs, and fees, the loan still dramatically increase the clients cash flow. The clients could be completely debt free by November 2o30 if the loan was originated in August 0f 2018. If they stick where they are at they would be until wont even have the house paid off until August 2043, and who knows if they can ever get out of the credit hole they dug into. That basically knocks off nearly 12 years worth of payment and interest.
If you as an individual want us to run your particular scenario to see if a cash out loan is right for you go ahead and start now.
Thank you BankRate.com
