When interest rates are low, many people who currently have a VA loan and are thinking about doing a VA streamline refinance have a question – “can I get cash out at closing when I do a streamline refinance?”
With the VA streamline program, the general rule is that the borrower cannot receive cash proceeds from the loan.
VA Streamline Refinance: No Cash Out at Closing
The VA streamline cannot be used to get cash out of your home to pay off debts (other than the VA loan that is being refinanced) and all loan proceeds must be applied to paying off the existing VA loan and the closing costs that were associated with the VA streamline.
Of course, there are exceptions to almost every rule – and there is an exception to this rule: in the event that the Veteran is buying energy efficient improvements, he can get up to $6,000 as long as the improvements are completed within 90 days of the VA streamline closing.
There are also some additional exceptions where the end result is in the Veteran getting cash at closing – although it is not much. These exceptions occur in situations such as:
- math errors in loan payoff or other computational errors
- changes in final pay-off figures
- up-front fees paid for the appraisal and/or credit report that are later added to the loan, and
- refund of the escrow balance on the old loan. This often occurs when a party other than the present holder originates the loan.
If you are in the process of doing a VA streamline refinance and you end up getting a little bit of money back – don’t be alarmed, it is fairly common.
If you are thinking about getting cash out of the equity of your home to consolidate bills, pay off other debts or do various home improvements, the VA streamline refinance may not be the best option for you. Be sure to speak with your loan officer who can help you decide what loan program is best for you and what you can do to make sure you don’t end up being surprised at the closing table.
Get free VA streamline refinance quotes today!