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Refinancing conventional loan into VA loan
If you don't have a VA home loan but would be eligible for one, you may refinance your conventional mortgage into a VA loan.
Generally, most members of the military, veterans, reservists and National Guard members are eligible to apply for a VA home loan. Spouses of military members who died while on active duty or as a result of a service-connected disability may also apply.
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"If they apply to refinance a non-VA loan into a VA loan program, it is considered to be a cash-out refinance by the VA," Naylor says. "This means that the veteran would need to be eligible, and they would be assessed the appropriate VA funding fee based upon eligibility."
Funding fees for cash-out refinances vary from 2.15% to 3.3%. The fee can be added to the loan balance.
It falls under the cash-out refinance program, but that doesn't mean the borrower actually gets cash back, as many lenders won't allow it. But generally, the homeowner can refinance up to 100% of the home's value, which is a huge plus in the current lending environment.
"Clearly the biggest advantage is the availability of 100% financing," Naylor says.