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VA Cash Out Refinance - Debt Consolidation |
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Page 1 of 2 WHAT IS A VA DEBT CONSOLIDATION LOAN?  A VA Cash Out or VA Debt Consolidation Loan will allow the veteran to get cash out for home improvement, debt consolidation, or refinance options to lower your payments. A VA debt consolidation loan or VA Refinance 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
- - Debt consolidation of personal or secured loans
- - Tax or judgment liens, and/or
- VA, FHA, or conventional mortgages. VA Refinance Loan proceeds beyond the amount needed to pay off the lien(s) or for debt consolidation may be taken as cash by the borrower for any purpose acceptable to the lender.
A VA cash out or VA debt consolidation refinancing loan is limited to 90 percent 100 percent of the reasonable value of the property. This is an increase that was effective October 16, 2008.
The VA refinance loan must be secured by a first lien on the property.
VA Limits a Debt Consolidation Refinance loan to the following:
90 percent 100 percent of the VA reasonable value, plus - the cost of any energy efficiency improvements up to $6,000, plus
- VA funding fee.
WHAT FEES AND CHARGES CAN BE INCLUDED IN THE LOAN?
While only the VA funding fee can be added to the 90 percent 100 percent limit to increase the VA refinance loan amount, cash proceeds from the loan may be used to pay VA allowable fees and charges and discount points.
The total of the following items, if paid from loan proceeds, cannot exceed 90 percent 100 percent of reasonable value:
- Payoff of liens
- allowable fees and charges (other than the funding fee)
- reasonable discount points, and
- cash to the borrower.
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