A Word about VA Funding Fees
Once you've been qualified for the VA Cash-Out Refinance Loan, the lender adds a funding fee to the qualified base loan amount; this fee is then sent to the VA once the loan funds . The funding fee is insurance of sorts that helps protect the government against VA mortgage defaults.
This "insurance" is why the VA allows borrowers to borrow more against their home with lower scores and higher debt ratios compared to other mortgage loan programs.
The amount of the funding fee varies depending on if you're a first time VA Cash-Out borrower and your branch of military – as you can see in the chart:
If your base loan amount is $200,000 and the funding fee is 3.3%, your final loan amount is $206,600.
In addition, if you're doing an interest rate reduction refinance loan (IRRRL) – meaning, you're refinancing an existing VA loan without cashing out – the funding fee is greatly reduced to .5%.
If your base loan amount is $200,00, a .5% funding fee means your final loan amount is $201,000 -- an amazing deal!
You may be exempt from the funding fee
The good news is that some veterans may be exempt from paying the funding fee:
- Disabled veterans – You must be at least 10% disabled with the Department of Veterans Affairs
- Surviving Spouse – You must be the surviving spouse of a deceased service person or one listed as Missing in Action (MIA) or a prisoner of war. Death must have been service related and the spouse cannot have remarried.
Even if you're not exempt, paying the funding fee is a small trade-off to being able to borrow and cash out more than non-veterans – along with enjoying lower closing costs and interest rates (compared to FHA, USDA and non-government issued insured loan options).
While VA loans already have reduced closing costs compared to non-VA loans(the Department of Veterans Affairs has strict guidelines pertaining to this),the low or greatly reduced funding fee makes the VA Cash-Out Refinance Program a definite win for veterans.
We'll pay your appraisal fee
And, to make this an even sweeter deal, if you close your VA loan with Meridian, we'll pay your home appraisal fee up front. It’s our way of thanking you for your service to our country.
If you're ready to get started on your VA Cash-Out Refinance Loan, call Meridian today at 877-878-0100. We can help you with all aspects of your loan – from determining eligibility to completing the COE for you.
Or, just fill out our form -- and we'll call you!