Question about timing w/ a VA cash out & conventional refi

[Greg R.]

Hello all,

I am currently working on a VA cash out (100%). Unfortunately, I got a really bad appraisal, probably about 15% low. I was considering going with another bank and trying my luck on another appraisal. However, I got to thinking and was wondering if I should maybe just run with the current appraisal, pull out the cash as intended, then refi into a conventional loan to free up my VA eligibility for another purchase down the road. In this scenario I'll have a lot of equity which should allow me to refinance into a conventional loan (and hopefully not need PMI).

In this scenario, how long would I have to keep the VA loan before refinancing into a conventional? I think I've heard 6 months in the past, but not sure if that's still applicable.

Any input would be helpful.

Greg

[Eileen L.]

Hi there, 

I just did this recently - went from a VA to a Cash out Refi, but to Conventional. It was a good timing, since I now have 20% equity to not need PMI w/Conventional. I also got a low appraisal and couldn't take out as much as I hoped, but it all worked out. I would suggest just refinancing to conventional w/cash out now. If you go through a VA refinance, I believe you will have to pay the VA funding fees, which go up for a second time use, so about 3.25% if I remember correctly. It's just adding fees to your loan that are not needed if you plan to refinance conventional in the future. I live in California and wanted to free up my VA loan to eventually rent out my current house and buy another primary, so it was the best option for me. It's hard to have two homes under a VA entitlement with the prices out here. Also, my conventional loan paperwork states a year without intent to rent, but I believe that's the standard. Hope that helps!