Change Date

September 15, 2004, Change 4

·  This section has been changed to create subsection lettering.

·  Subsection b has been changed to replace “CRV or NOV” with “Appraised Value.”

a. What is a VA Cash-Out Refinancing Loan?

A cash-out refinancing loan is a VA-guaranteed loan which refinances any type of lien or liens against the secured property.  The liens to be paid off may be

·  current or delinquent, and

·  from any source, such as

-   Tax or judgment liens, and/or

-   VA, FHA, or conventional mortgages.

Loan proceeds beyond the amount needed to pay off the lien(s) may be taken as cash by the borrower for any purpose acceptable to the lender. 

A cash-out refinancing loan is limited to 90 percent of the reasonable value of the property.

The loan must be secured by a first lien on the property.

b. Maximum Loan Amount

The maximum loan amount is 90 percent of the appraised value plus the cost of any energy efficiency improvements plus the VA funding fee.

c. What Fees and Charges can be Included in the Loan?

While only the VA funding fee can be added to the 90 percent limit to increase the loan amount, cash proceeds from the loan may be used to pay allowable fees and charges and discount points. 

The total of the following items, if paid from loan proceeds, cannot exceed 90 percent of reasonable value:

·  Payoff of liens

·  allowable fees and charges (other than the funding fee)

·  reasonable discount points, and

·  cash to the borrower.