A VA refinance loan is known as a “VA Cash Out” in several refi scenarios: when the veteran is refinancing more than their property’s current payoff and getting cash back from their equity, when he or she is consolidating a first and second mortgage, or when they are paying off other liens or consolidating debt.
These situations are all considered a VA Cash Out loan. Another type of VA Cash Out is when the veteran is refinancing a conventional (non-VA) loan into a VA loan.
In a VA Cash Out loan, the funding fee can be anywhere from 2.4% to 3.6% of the loan amount but it is financed into the loan. On a $250,000 loan, this could add up to $9,000 to the loan’s principal.
If the veteran has 10% or more disability from the VA, the funding fee is waived. It important that the lender discuss these fees with the veteran so they can make educated decisions on their refinance. Indigo Mortgage has helped thousands of New Mexico veterans with VA refi’s; please call with questions and we’ll help show you the best rates and lowest fees to refi your VA loan.