VA Cashout Refinances in Pennsylvania and the rest of the nation allow Veterans to tap into the equity in their home to consolidate bills, payoff higher rate mortgages or just to obtain cash.
The Department of Veterans Affairs has a broader classification of what constitutes a cashout refinance than other types of mortgage financing. The VA considers any refinance that pays off a non VA mortgage or pays off a VA mortgage plus any other debt to be a cashout refinance, regardless of whether the Veteran receives cash at closing or not. Essentially this means that the VA will call any refinance a cashout refinance unless it is a VA streamline refinance, also known as the VA IRRRL program.
Technically, the VA does allow a Veteran to take 100% of the appraised value with a cashout refinance to payoff any mortgages, any other non-mortgage related debt and receive cash at closing. While these might be the base VA underwriting guidelines, practically all lenders have their own requirements on top of the base VA guidelines. These additional underwriting guidelines, often called Underwriting Overlays, create additional restrictions that put limits on what the VA will allow. More can be read about underwriting overlays here.
The vast majority of VA lenders that I have seen limit a VA Cashout refinance to 90% of a home’s value when receiving cash or paying off any debt outside of the first mortgage. Under the VA’s classification of what is considered a cashout refinance, we do have a VA Cashout program to 100% of the appraised value, with cash at closing available to 95% of the appraised value.
Below is the program available that most closely resembles the base VA guidelines for maximum loan to value under the VA Cashout Refinance guidelines…
100% of the Appraised Value
- 620 minimum credit score
- Payoff of any mortgages on property only
- Payoffs of any non-mortgage debt not allowed
- Cash not allowed at closing
95% of the Appraised Value
- 640 credit score minimum
- Payoff of mortgages on property
- Payoff of non-mortgage debt allowed
- Cash allowed at closing
- Credit scores 620-639 allowed but limited to 90% of the Appraised Value