A Quick Look On How Favorable The VA Net Tangible Benefit Rule Of Today Is And How It Will Affect Your VA Home Refinancing?

Can you refinance your California VA home mortgage to get cash out of the equity in your home? The VA says yes — but you’ll need to qualify under new regulations that include a “net tangible benefit” rule. What is “net tangible benefit” and what does it mean for your VA mortgage refinance in California?

Now grab a pen and paper as we take a deep dive to uncover the basic types of VA loan refinances that the “net tangible benefit” rule applies to.

The Veterans Administration has defined three types of home mortgage refinancing: the VA IRRRL (Interest Rate Reduction Refinancing Loan), and Type I and Type II cash-out refinancing loans. VA IRRRL loans refinance current VA home mortgages for lower interest rates. They aren’t affected by the “net tangible benefit” rule.

Type I Cash-Out Refinances: The amount of your refinanced mortgage including the VA funding fee, doesn’t exceed the payoff for your current VA home mortgage.

Type II Cash-Out Refinances: The amount of your refinanced mortgage, including the VA funding fee, does exceed the payoff amount for your current VA home loan.

What is the “net tangible benefit test” that applies to VA Type I and Type II Cash Out Refinances?

Your refinanced loan needs to meet one of eight conditions that the VA has established for qualifying Type I and Type II VA Cash-Out refinance loans.

  1.  The #1 criterion is that you need to have more than 10% equity remaining in your home after the refinance. If this isn’t the case, you have seven other criteria that can meet the “net tangible benefit” test.
  2.  Your new mortgage term is shorter (i.e. refinancing a 30-year VA home loan to a 15-year VA home loan) resulting in less interest paid over the course of the loan.
  3. Your new VA home loan refinance eliminates mortgage insurance.
  4.  You have a lower monthly principal and interest payment.
  5. You can get a lower interest rate. Your disposable income increases (including using the funds for debt consolidation).
  6.  Your disposable income increases (including using the funds for debt consolidation).
  7.  You are transitioning from a construction loan to a permanent VA home mortgage.
  8. You are refinancing from an ARM to a 30-year fixed rate home loan or other term fixed rate VA home mortgage.

You can refinance your VA funding fee as part of a VA home mortgage refinance, but it will be included in your new refinanced mortgage equity calculation. You can find out all of your options for a VA home loan refinance by working with a qualified VA home loan and California mortgage specialist.

Sources

New headline is Sharethrough 72 – addresses the main point of Quicken loan article
https://www.benefits.va.gov/homeloans/documents/circulars/26_18_30.pdf

California Platinum Loans

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Discover The Meaning of Real Estate Secret Words For Instance: Fannie Mae, Freddie, Conforming Loans And So On Today

If you’re looking for a new home to buy or investigating home mortgage loan choices, you’ve probably run into some friendly, upbeat people who want to help you achieve your home ownership dreams or maximize the value of your home buying potential. However, some of these people sure talk funny! The real estate industry does have its own lingo. Just like any industry, sometimes the pros forget that everyone doesn’t know every single specialized term or abbreviation. So, we thought we’d put together a short list of some common terms you’ll hear, and what they stand for.

  • Conforming Loan: A conforming loan is a mortgage that fits Fannie Mae and Freddie Mac (see below) guidelines for the size of loan and loan underwriting criteria. In November 2019, the FHFA (Federal Housing Finance Agency) announced that the maximum 2020 conforming loan limit for a single-family house would be $510,400.
  • Conventional loan: A conventional loan is a home mortgage that isn’t provided through or guaranteed by a government organization. So, a mortgage that is offered by a private lender or a bank/credit union that isn’t a VA, USDA, FHA, or other government sponsored loan is a “conventional” mortgage.
  • Escrow: Escrow is an unusual word, but it just stands for the third party and time period where the money and contracts in a real estate transaction are verified and the property title is transferred.
  • Fannie Mae and Freddie Mac: These two people aren’t a married couple. They’re two different home mortgage associations that are chartered by the Federal government. Freddie Mac stands for the Federal Home Loan Mortgage Corporation. Fannie Mae stands for the Federal National Mortgage Association.
  • FHA: FHA stands for the Federal Housing Association, which was established as part of “New Deal” programs in the 1930s, and is part of the U.S. Department of Housing and Urban Development.

There are a lot of other specialized terms in the real estate and home mortgage industry. One of the advantages of working with an RE and mortgage professional is their ability to explain these terms to you, so you can understand what your choices are in homes to buy and loans that you can qualify for.

Sources

https://www.housingwire.com/articles/hey-housing-professionals-your-jargon-isnt-helping-consumers/
https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-Maximum-Conforming-Loan-Limits-for-2020.aspx

California Platinum Loans

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Which Financing Option is Better For Your Financial Future in California? A Home Equity Line of Credit – HELOC or A Mortgage Loan Refinance?

What-Is-Collateral

Do you need extra cash for specific needs like home repairs or college costs? Which should you choose: a home equity line of credit (HELOC) or a mortgage refinance? Which is your best choice depends on how much money you need, how much equity you have in your home, what purpose you intend for the cash, and whether you have an FHA, VA, or another type of mortgage.

Cash-Out Refinance Vs HELOC Interest Rates

You’ll pay more interest on a HELOC than you will with a cash-out mortgage refinance. HELOCs can have interest rates two to three points higher than the best rates on a mortgage refinance loans.

What Is the Difference Between a Cash-Out and a Straight Refinance Loan?

A Cash-Out & a Straight Refinance Loan

A straight mortgage refinances loan will allow you to refinance a percentage of the value of your mortgage. Mortgage refinance programs like the VA streamlined Interest Rate Reduction Refinancing Loan (IRRRL) won’t allow you to take additional cash out of the equity in your home.

A cash-out loan, which is also available as a VA and FHA loan product, and some other loan programs, let you take cash out of your home’s value. A VA cash-out loan is a unique benefit for qualified veterans. Nearly all cash-out programs limit how much additional cash you can borrow based on your home’s value. A VA cash-out refinance could allow you to borrow additional cash up to 100% of your home’s value.

What’s a Home Equity Loan? Is It the Same as a HELOC?

A home equity loan isn’t the same as a cash-out refinance and it’s not the same as a HELOC, either. A home equity loan can be a good choice if you need money to pay for home repairs or for another one-time, essential cost. Home equity loan amounts are based on the amount of equity you have in your home.

Why Choose a Cash-Out Refinance Over a HELOC?

Cash Out Refinance

A home equity line of credit has some benefits, which include acting as a revolving line of credit instead of a one-time cash payment. You can have varying payment amounts with a HELOC, but its higher interest rate often makes a straight one-time cash-out refinance more attractive financially. HELOCs are usually better financial deals than high-interest credit cards, however.

A cash-out refinance is going to offer you better loan terms and a more appealing interest rate than nearly all HELOC alternatives. When you’re shopping for a cash-out mortgage refinance, you can save time and compare terms from different lenders by working with an experienced mortgage refinancing professional. An experienced local independent mortgage broker may have multiple resources and lending channels allowing them to find the refinancing product that’s right for you.  If you are interested in learning more about your options get in touch with us here at California Platinum Loans.  We are a Local Independent Mortgage Broker shop with many niche loan products we can custom tailor to your specific situation.

Source

https://www.bankrate.com/home-equity/home-equity-loan-vs-line-of-credit/

California Platinum Loans

  https://californiaplatinumloans.com