Like any refinance, a VA cash-out refinance loan is a new home loan. However, what makes it special is that it allows you to take cash out from your home's equity. This money can then be used for any number of purposes, including debt consolidation, vacation funds, college tuition, and anything else you can dream of.
For starters, you can only get a VA cash-out loan if you have equity built up in your home. It usually takes a number of years to build equity, though it may depend on how the housing market is in your neighborhood. If house prices are rising significantly in your area, you may be building equity faster.
Depending on what your goals are, a VA cash-out loan could be the right choice to help you make them happen. Check out the lists of pros and cons below to weigh the benefits and potential negatives of this type of refinance loan.
Essentially, the process to get a VA cash-out loan is the same as the process to get a VA purchase loan. So, if you don't already have a VA loan, you'll first need to meet the VA's eligibility requirements.
Once your eligibility is established, you'll have to verify your employment and income with your W2 forms for the last two years, two months of pay stubs, your two year job history, and more. You'll also need to provide a full accounting of your assets and liabilities and have your home appraised by a VA appraiser. This process typically takes at least 30 days or longer.