VA Loan to Conventional

[Michael Thompson]

I have a home that has been my primary residence for several years, I rented it out earlier this year and now wish to refi to utilize the equity (+75K). The home affords a positive cash flow of $800/mo. It is currently a VA backed loan w/ Sun West. With the current climate, a conventional loan has much higher interest rates. Any suggestions?

[Andrew Postell]

@Michael Thompson the benefit here is that the cash would need to out weigh the increase in rate.  Now, as @Joe Funari mentioned above, maybe your rate is already higher. But let's assume for a moment that your rate is SUPER low....you can always get a HELOC on your property instead of getting a cash out loan. Or maybe I should say...in a normal economy a HELOC would be available. It might be a little harder to get right now...but I still think you can get one.

And just in case, a HELOC is a tool that allows you to pull the equity out of your property without upsetting your primary mortgage. It's a 2nd loan on the property. So the 1st loan stays put, the HELOC is put as a 2nd loan, and that's how you can keep a good rate on your first loan while still accessing your equity.

Some things to know about HELOCs - they are more like a credit card.  You use them - pay them back.  Use it again - pay it back.  That's why people who FLIP properties love HELOCs.  Allows you quick access to money and you pay it back and use it again on the next one.  Now it is a variable rate....and it will have a "maturity" date of about 10 years.   So it's not designed to keep a permanent balance on it.  Right now rates are low...so maybe it's ok to keep a balance right now....but at that 10 year mark, you might get stuck in something you don't like.  So as long as you have a plan to pay it back....like with Flipping Homes...then you should be good.  Also, closing costs are SUPER low on HELOCs...maybe $500 in some cases.  So if it's something you think might fit your needs, I might suggest looking at that product.

Certainly here to help with any other questions.  Thanks!