d. Maximum Guaranty

The maximum guaranty on cash-out refinancing loans is $36,000, even for loans greater than $144,000.  For most other VA-guaranteed loans, the maximum guaranty is $60,000 on loans greater than $144,000.

e. Veteran’s Entitlement

The veteran must have sufficient available entitlement for the loan.  If an existing VA loan on the same property will be paid off by the refinancing loan, the entitlement used for that existing loan can be restored for purposes of obtaining the new loan.

f. Occupancy

The veteran must certify that he or she intends to personally occupy the property as his or her home.

Reference:  See section 5 of chapter 3 for details.

g. Automatic or Prior Approval Processing?

Only lenders with authority to close loans automatically may close cash-out refinancing loans automatically.  All others must submit these loans for prior approval by VA.

h. Lender Procedures

Loan processing procedures are virtually the same as for non-refinancing loans.  A full appraisal, credit information, and underwriting are required.  Generally, follow the procedures described in chapter 5 of this Handbook.

To report loan closing, submit all of the documents required for non-refinancing loans (See chapter 5) plus a statement signed by the veteran which shows:

·  the cash proceeds paid

·  an itemization of the debts paid from loan proceeds, and

·  the identification of those debts secured by liens of record.