VA Refinance: Cash Out vs. Rate & Term– NewDay USA

Loans for Veterans: Cash Out Refinance vs. Rate & Term Refinance

If you’re interested in refinancing your mortgage with a VA home loan, it’s important for you to understand your options. Keep reading below to learn the difference between a Cash Out Refinance and a Rate & Term Refinance, and see how the programs could benefit you. NewDay USA offers both loan programs in order to help you get the financial security you deserve. 

What is a Cash Out Refinance?

A Cash Out Refinance is a type of mortgage that allows you to turn the equity in your home into cash in the bank. “Equity” refers to the value of a mortgaged home minus the outstanding mortgage balance. So, for example, if your home is valued at $200,000, and you currently owe $150,000 on your mortgage, you have $50,000 in equity.

With a VA Home Loan, you can take advantage of that powerful equity by refinancing your existing mortgage and taking out cash. A VA Cash Out Refinance allows you to refinance your home for 100% of its value, including the mortgage balance. So, if you have $50,000 in equity, you could qualify to get a full $50,000 in cash, minus your closing costs. From 2021 January to October, our customers took out an average of $58,903 in loan proceeds

With a Cash Out Refinance, you can pay off high-interest credit card debt * , complete home improvements, pay for college tuition, or anything else. A Cash Out Refinance can help you get the money you need for your family and home.

What is a Rate & Term Refinance?

With a Rate & Term Refinance, you will refinance your existing mortgage to change the interest rate or the repayment term. Typically, a Rate & Term refinance allows you to reduce your interest rate, and as a result, lower your monthly payment. You may also consider changing the repayment term. For example, you could refinance a 30-year mortgage into a 15-year mortgage.

Unlike a Cash Out Refinance loan, a Rate & Term Refinance does not take any cash out of your home’s equity. If you’re considering a VA mortgage, and you aren’t interested in taking cash out, a Rate & Term Refinance may be the right program for you.

What is the Best Option?

There is no “one size fits all” answer to this question. Finding the best mortgage for you all depends on what your priorities are and what you want to accomplish. If you’re interested in consolidating your debts * or if you need cash for a home improvement project, you should consider a Cash Out Refinance. If you want to lower your monthly payment without taking any cash out of your home’s equity, a Rate & Term Refinance may be the best program for you. If you’re not sure which program is best for you, our Account Executives are standing by to discuss your options with you.

Learn More About Your VA Refinance Options

To learn more about your options and find the best VA refinance to fit your needs, get in touch with us today. Call us at 800-995-0374 or get started online right now.