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VA Loan Cash Out Explained - YouTube
Channel: Mortgage Education & Finance with Stephanie Weeks
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in this video we're going to talk about
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lots of exciting things one of the main
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ones
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being how do you save tons of money and
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maybe consolidate some of your other
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debt
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stay tuned because i'm going to go
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through all of that with you
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i want to take a moment to say thank you
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so much to all our veterans i love va
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loans they're my favorite
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i feel like it's the least that i can do
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to give back to thank you for your
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service and the sacrifices you make as
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well as the sacrifices of
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your family what is a va cash out
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refinance
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it might be a little bit different than
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you think it actually falls under two
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categories
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the first category being the one that
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you're expecting if you're taking cash
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out
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and not just paying off your mortgage
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that's what we know about cash out
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refinances
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but did you know that a cash out va
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refinance
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is also when you're paying off a
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mortgage only
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but a mortgage that is not currently a
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va loan
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so if you're looking to refinance from
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your conventional fha whatever you pick
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it
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from a current loan that's a non-va into
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a va you're actually considered to be
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doing a va
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cash out refinance what are some of the
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benefits
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of cashing out with your va refinance
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well if you're doing another
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type of loan that involves mortgage
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insurance and you're paying that monthly
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how nice would it be to refinance to a
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va loan
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with a lower interest rate and also drop
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that monthly mortgage insurance
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that would be a great way to save
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automatically even if you're not getting
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cash back at closing
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some of the things that you can use your
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va cash out refinance for
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if you want to do more than just pay off
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your current mortgage would be
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maybe you want to consolidate some debt
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maybe you want to consolidate some high
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interest loans
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there are of course a pros and cons to
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this such as
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you don't want to take a loan that might
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have five years left on it
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and refinance it for 30 years if you
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plan to have the new mortgage for 30
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years
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but maybe if you plan to sell your house
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in the next three to five years
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then it might not be so bad to take an
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installment loan that could be a 400
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monthly payment and a 7 interest rate
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and go ahead and consolidate that into
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your va loan with a crazy low interest
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rate like they are right now
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you'd save money monthly and you'd save
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money in the long term as well
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because you'll be paying it off in full
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in the three to five years anyway
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here's a great example i just had some
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consumers yesterday that were actually
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looking to refinance and they were going
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to put more money
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in their pocket and not pay off their
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automobile they didn't even
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think about paying off their automobile
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which was at a 13
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interest rate i couldn't even believe it
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13 interest rate
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and around a 400 monthly payment well
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they could borrow a little bit more on
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their mortgage
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and knock that out instead of worrying
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about borrowing less on their mortgage
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so that their payment was
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let's see what it might have been 13 000
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30 year loan
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they were at a 2.75 interest rate 53
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a month it was going to cost them in
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their mortgage or 450 something dollars
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in that auto loan
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that's just one of probably several
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examples of things that you could use
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your cash out in va refinance
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to consolidate debt and put yourself in
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a better short-term and
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long-term position gonna take a quick
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minute to say don't forget to like the
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video and subscribe to the channel
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before i dive into
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the next section i want to decipher the
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difference between
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a va cash out which we just explained
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and a
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va streamline also called an earl
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i-r-r-r-l interest rate reduction loan
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basically
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the difference is with an earl as i'll
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refer to it
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is you're literally just paying off your
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current va mortgage not a different type
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but your current va mortgage you only
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have one mortgage
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not multiple and you are just paying off
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that mortgage
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rolling in your closing costs and
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prepaids and
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you don't even need an appraisal for
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that option you're not going to get any
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cash back at closing
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but it's fantastic if you can reduce
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that interest rate
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and save yourself tons of money either
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monthly or
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long term so short term or long term
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just want to point out those differences
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between
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the true cash out and the actual
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streamline or girl
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so the other thing i want to talk about
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today was the cost
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involved the costs are going to vary
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from lender to lender yes but i want to
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at least give you some reference points
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if you're doing the cash out which we're
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going to talk about now i'm going to do
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another video
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just on an earl so you can check that
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one out later for the cost involved in
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that one but for the cash out today
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where we're either pulling cash out
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or and or paying off a non-va loan
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the cost involved in that would be
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number one an appraisal appraisals do
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also vary from area to area and lender
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to lender
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i would say a good reference point might
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be about 500 so you can expect to have
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that cost
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involved in your va refinance you're
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most likely also going to have a title
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company
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they're going to charge their fees
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they're going to charge cancellation of
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the current mortgage
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they're going to charge recreation of
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the new mortgage that has a lot to do
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with your loan amount
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so not including title insurance because
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that
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is really hard to calculate or give you
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a reference point
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but just talking about maybe recreation
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cancellation title fees
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maybe that's five to seven hundred
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dollars and of course you've got your
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title insurance on top of that
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then the other piece that you're going
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to have is you're going to have your
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closing costs
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such as you might be paying for a credit
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report
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an administration fee you might be
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paying for
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underwriting fee lenders call them
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different things and i have seen lender
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fees range from
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zero all the way up to several thousand
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dollars just to give you a reference
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point for that as well
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last but not least and i don't like to
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call it a cost because i don't believe
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it to be a cost
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but that would be to set up your new
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escrow account most lenders will not
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allow an
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escrow account transfer which means your
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new
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loan will start a whole new escrow
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account meaning you'll get a refund of
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your current escrow account about 45
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days after this new closing
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i don't like to call it a cost because
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think about it this way even if you have
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no mortgage
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do you pay home insurance you should and
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you probably do
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and even if you have no mortgage you
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have property taxes absolutely
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so those aren't necessarily cost but it
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feels like it
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because you're starting a new escrow
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account and that includes some cushions
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required to make sure that
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the account can handle some ebbs and
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flows those are things that you can
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think about when it comes to
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the cost involved or surrounding your
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cash out va loan
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the last thing i'm going to talk about
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today are the myths surrounding va loans
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i want this to be so clear because
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our veterans have sacrificed so much and
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you deserve
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everything that you have earned a lot of
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the myths are
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things such as you can't refinance to a
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va loan when you're not currently in a
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va loan
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that is not true another one that i hear
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a lot
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is that if you're purchasing i know this
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is a refi video but we're talking about
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myths
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if you're purchasing a home and
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financing via va that they will
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finance your closing costs and prepaids
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they will not
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you can try to negotiate the seller to
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help you with that but you have to come
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up with that money if not
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they don't cover your closing and
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prepaids although they will finance you
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100
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if you're eligible another huge myth
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that i'm hearing
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all of the time is that you can only use
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your va benefit once
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and that's absolutely not true and
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breaks my heart because
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it's such a good loan and you should not
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be missing out on that there's actually
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not a limit to how many times
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that you can use your va benefit to get
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yourself a va loan
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and last but not least one of the other
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big myths i hear is that you can only
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have one va loan at a time
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surprisingly that is also not true
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it depends on your eligibility but i've
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known of veterans actually have as many
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as four loans at once
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again depends on your eligibility and a
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number of factors but that's another big
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myth that hopefully we can bust today i
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hope that this is helpful for you today
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when we're talking here about va and
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we're talking about cash out we're going
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to do that other video
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talking about the streamline option
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remember you deserve and have earned
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these benefits
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so always look into your va loan even if
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you think it's maybe not the way that
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you're gonna go
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today's free download is going to be a
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cheat sheet that i've come up with
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and it's basically gonna walk you
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through the cost versus break even
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to do your refinance you want to make
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sure that you're looking at the cost
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and the break even to make sure you're
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making the best decision
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and don't get distracted by pretty shiny
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objects such as rates that seem
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amazing make sure it is beneficial to
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you so
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check it out by dropping the link in the
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description below i hope you enjoy that
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cheat sheet
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drop me a comment below maybe the
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comment today could be
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cash out hoping this video has been very
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helpful love to hear from you all i'd
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love to see
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cash out in the comments i'd love to see
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a bunch of those comments saying cash
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out so i know a lot of our veterans are
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getting benefits from this video today
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thank you for watching if you have not
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subscribed yet why not
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go ahead and do it what's it gonna hurt
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seriously though
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subscribe to the channel don't forget to
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hit the bell to be notified
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please do share these videos and the
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channel with your friends and family to
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help me spread my mission
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of mortgage peace and since you're here
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with me today and you're visiting anyway
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stay a little longer check out some of
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these other videos i'll drop some links
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up here
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