Does the seller have to pay for any of the buyer's closing costs on a VA transaction?

No: The seller is not required to pay any additional closing costs on a VA loan.

Is a termite inspection always required on a VA loan?

Yes: A termite inspection will be required and is typically paid by the seller, but it can be paid by the VA buyer. If any infestation is found, it must be cured. Merchants can sometimes close without termite clearance in hand - contact us for details.

Does the VA loan take longer than conventional to close?

No: A VA loan can close in 2 weeks in most locales with Merchants Home Lending.

Are VA appraisers tougher than conventional on the property?

No: VA appraisers use the same process as conventional but have more latitude in their assessments since only VA underwriters review their work (not appraisal management companies).

Can a VA buyer waive contingencies on their offer?

Yes: VA buyers can waive both loan and appraisal contingencies, though the VA Amendatory Clause still provides protection against low appraisals.

Can a Non-VA buyer assume a VA loan?

Yes, but the seller's VA benefit remains tied up until the loan is paid off. We generally don't recommend this unless the seller won't need their VA benefit again.

Should I accept a VA offer?

Yes, with zero hesitation. VA loans offer the most predictable outcomes of all loan types.

VA Cash-out Refinance FAQs

1. What is a VA cash-out refinance?

A VA cash-out refinance allows eligible borrowers to replace an existing mortgage with a new VA loan while accessing home equity as cash, which can be used for various financial needs.

2. How does a VA cash-out refinance work?

The borrower refinances their current loan into a larger VA loan based on home value. The difference between the new loan and existing balance is paid out as cash at closing.

3. How is a VA cash-out refinance different from a VA IRRRL?

A VA cash-out refinance provides access to equity, while a VA IRRRL is designed only to lower interest rates or payments without cash withdrawal or major underwriting changes.

4. Can I use a VA cash-out refinance on a non-VA loan?

Yes, a VA cash-out refinance can be used to refinance a conventional or FHA loan into a VA loan, provided the borrower meets eligibility and occupancy requirements.

5. What can VA cash-out refinance funds be used for?

Funds can be used for home renovations, debt consolidation, education expenses, medical costs, or other personal financial goals, offering flexible use of home equity.

6. Who is eligible for a VA cash-out refinance?

Eligibility includes qualified veterans, active duty service members, and eligible surviving spouses who meet VA service requirements and lender credit and income guidelines.

7. Do I need a Certificate of Eligibility (COE) for a VA cash-out refinance?

Yes, a valid Certificate of Eligibility is required to confirm VA entitlement before a cash-out refinance can be approved.

8. What credit score is required for a VA cash-out refinance?

The VA does not set a minimum score, but many lenders prefer credit scores around 620 or higher due to the higher risk associated with cash-out refinancing.

9. Are income and debt-to-income requirements stricter for cash-out refinances?

Yes, lenders often apply stricter income and debt-to-income standards to ensure borrowers can manage higher loan balances and monthly payments after refinancing.

10. Do I have to live in the home to qualify for a VA cash-out refinance?

Yes, the property must be the borrower’s primary residence. Occupancy requirements are strictly enforced under VA loan guidelines.

11. How much cash can I take out with a VA cash-out refinance?

The amount depends on home value, existing loan balance, and lender limits. Higher property values in California may allow greater cash access.

12. What loan-to-value limits apply to VA cash-out refinances?

VA cash-out refinances often allow up to 100 percent loan-to-value, though many lenders impose lower limits to reduce risk.

13. Does the home need a new appraisal for a VA cash-out refinance?

Yes, a new VA appraisal is required to confirm current market value and ensure the loan meets VA property and valuation standards.

14. Can I do a VA cash-out refinance if my home value has increased?

Yes, increased home value can improve cash-out eligibility by providing additional equity, which is especially beneficial in appreciating California housing markets.

15. Can I refinance a second home or rental property with a VA cash-out loan?

VA cash-out refinances generally require primary residence occupancy. Second homes or investment properties typically do not qualify under VA guidelines.

16. Is there a VA funding fee for cash-out refinances?

Yes, VA cash-out refinances include a funding fee. The percentage depends on entitlement use, loan type, and borrower status.

17. Can the VA funding fee be rolled into the new loan amount?

Yes, most borrowers choose to finance the funding fee into the new loan balance, reducing upfront out-of-pocket costs.

18. Are VA cash-out refinance rates higher than standard VA refinance rates?

Cash-out refinance rates are often slightly higher than VA IRRRL rates due to increased lender risk and expanded loan benefits.

19. How does a VA cash-out refinance affect monthly payments and loan term?

Monthly payments may increase due to a higher loan balance or extended term. However, restructuring debt can improve overall financial flexibility.

20. Is a VA cash-out refinance a good option for debt consolidation or renovations?

Yes, it can be effective for consolidating high-interest debt or funding renovations. Careful planning is essential, particularly for borrowers managing property costs in California.