Should I do a VA Cash out REFI or not?

3 Replies

Hello all, just would like to some advice on what to do. I am interested in renovating my basement and/or buying a commercial property mixed-use to be exact. Would like to open a small business and have rental apartment/s above to help pay off 2nd mortgage.

Current Situation:

Primary Home = SFH VA LOAN 30YR/3.0 FIXED RATE. Bought two years ago for $255,000. Owe $190,000 now. Appraised for around $450,000.

Best VA Cash REFI Offer:

USAA offer 30YR/3.8 FIXED RATE. Based on $400,000 home value. I am only taking $100,000 cash at closing. New mortgage will be around $300,000. 

Worth it? They sent me paperwork already, but I have not signed yet. Also closing cost are around $15,000 it looks like. I am located in NYC. 

@Eric DeVito You should be getting a nice lender credit with the terms offered above.  If not I would keep shopping around.

@Eric DeVito

Should you refi?  Absolutely.

With those terms?  Absolutely not.

That rate is about right (for no points), but those closing costs?  Yikes.  You should only have the funding fee plus around $2K in lender/title fees.

If you are going to have this mortgage for 10+ years, not refinancing again or selling, then maybe it's the right move.  But if you might sell or refi again in less than 10 years, then you may consider taking a higher rate with a lender credit and get those costs down.  Why?  For example, a rate in the mid 4's would be about $100/mo higher payment, but you could get a lender credit in the $5K - $8K range.  (Disclaimer, these are not actual quotes, just an example.)  But the math is the math.  Your goals should dictate which direction you go.

If I were you, I would find a rockstar LO that isn't an order-taker, who is passionate working with both investors and veterans, and is educating you on all your options.

I'm not licensed in NY, but if you need a referral to a rockstar LO in NY, shoot me a PM and I'll connect you.

Best of luck, and TYFYS!

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