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Today's Average Rate
3 Months Ago
|Refinance - 30-year fixed||6.49%||5.952%|
|Refinance - 15-year fixed||5.829%||4.982%|
|Purchase - 30-year fixed||6.525%||6.225%|
|Purchase - 15-year fixed||6.232%||4.832%|
With cash-out refinancing, you refinance your mortgage with a mortgage that is larger than the amount you still owe on the original mortgage and then you keep the difference. Cash-out refinancing differs from home equity loans in that you are actually taking out a new mortgage and not simply taking a loan off the equity you’ve built up on your property.
One thing to keep in mind with cash-out refinancing is that you will still need to collect all the documentation you would for a mortgage, including proof that you can keep up with the payments.
Many people confuse home equity loans and cash-out refinancing, because both deal with using your home equity to attain money from a lender.
With a home equity loan (HEL) you are using the equity of your property, or part of it, as collateral for a loan. These loans are often referred to as a “second mortgage,” and entail the lender making a one-off payment to the borrower, whose equity shrinks in relation to the size of the loan. As the owner repays the loan—and the relevant interest and fees—the equity begins to increase.
Because a home equity loan is secured by the property, they typically have lower interest rates than unsecured loans.
Unlike a HEL, a cash-out refinance entails securing a new mortgage to cover more than the preexisting mortgage so that you can get the difference as a loan. The HEL, on the other hand, is taken out in addition to your existing mortgage.
A cash-out refinance can get you a large sum of cash that you can use as you please. This can be to consolidate outstanding, high interest debts under a single loan with a friendlier interest rate, or to pay for a family emergency or home renovations—it's up to you.
Also, a cash-out refinance is usually easier to qualify for than other loans. You already own the property and have the collateral, so gaining approval shouldn't be too difficult.
Having said that, one con of cash-out refinances is that the process can be similar to attaining a standard mortgage, meaning you'll have to put together a wide range of documents relating to your taxes, salary, bank statements, and more. You may also face steep closing costs on the loan. In addition, if for some reason the value of your home—and thus your equity—take a hit, you could end up owing more than your house is worth down the road.
VA home loans help active service members, veterans of the armed forces, and eligible family members, including surviving spouses, become homeowners. The VA (the Department of Veterans Affairs) does not offer mortgages directly but rather guarantees the loans are issued through private lenders. A VA loan can be a good alternative for those who qualify. Eligible borrowers should consider going this route, especially if their financial profile is less than stellar.
VA loans are available to current service members and, in some cases, their spouses:
To obtain a VA loan, borrowers must present a VA certificate of eligibility (COE).
The COVID-19 pandemic has impacted the home buying process in 2020 in several ways.
Private lenders offer VA loans with the backing of a VA guarantee. That said, all lenders are not the same; some may be better than others for your situation. You will need to do your homework to find the best VA lender for your situation.
Different lenders may be best for borrowers with different situations or offer some specific benefits. Some lenders may be better for borrowers in certain conditions or offer a better experience for some borrowers. This might include:
As with any type of loan, you will want to know:
Overall, are VA loans a focus and priority of the lender? Do they seem to welcome borrowers looking for VA loans?
While VA loans don’t require private mortgage insurance, if you put less than 20% down, you will need to pay a VA funding fee. This fee is a percentage of the amount borrowed and will vary based upon:
Additionally, your lender might charge for things like a credit check, VA appraisal fees, and any discount points you decide to pay on the mortgage, insurance, and other closing costs. This will vary by lender in some cases these costs can be rolled into the loan.
To apply for a VA loan, you will need to apply for a certificate of eligibility. There may be forms to complete, and active veterans will need a statement of service. Requirements may vary a bit for surviving spouses, National Guard, or Reservists.
You will also need to prove that you will be living in the home you are trying to finance through a VA loan. These loans cannot be used to finance investment property.
The VA does not have a minimum credit score requirement. However, the private lenders through whom the loan will be made might have their own minimums. Borrowers with a credit score lower than 620 will want to look for a lender who will still make the loan and from whom that can still get a decent interest with a lower credit score.
If the active military or veteran is legally married, then their spouse can co-sign the loan. Two unmarried military members can also co-sign together with no adverse ramifications. A military member can also bring an unrelated non-military co-signer with one caveat. The VA guarantee on the loan is limited to the amount of the military member or veteran’s interest in the property. Note that not all lenders will allow this type of arrangement at all.
The rules prohibit the use of a VA loan to finance the purchase of an investment property. You also may not use a VA loan to finance a vacation home.
Borrowers who are still active military members, active in the National Guard, or active reservists can still qualify for a VA loan.