VA Funding Fee - closing cost is high

[Rhowela Friel]

Hello. I am new to real estate investing and my husband and I are currently in the process of doing a cash out refi on our primary home. Our mortgage currently is 480k at 2.875% and with the VA cash out refi, it would be 647k at 3% with 133k cash going to us. We are planning on using the equity to pay off our car and purchase additional property.

The refi my husband and I are doing is a VA cash out refi with a 2.5% funding fee. With the funding fee, our closing cost is about 33k. This seems like such a high amount of money to pay to pull out 133k. I'm now apprehensive to go through with it. I'm hoping I can have some help with deciding to move forward or not.

Thank you for your time. 

[Ronnie Galindo]

@Rhowela Friel, I feel your pain! I did a IRRL with the VA and it cost me roughly $10k without me pulling out any money and just getting a better rate. The VA is able to give such incredible rates and lend at such a high LTV due to these fees. Have you explored the idea of re-financing into a conventional? I just did this with my property and it did one of two things for me, it let me pay lower closing costs (due to not having that huge fee from the VA) and it allowed me to free my VA entitlements.

With that said, I did get less back from my cash-out BUT.... I freed up my VA loan! So when I decide to move, I can just use my VA loan again so 0% down on the next home I buy and then my current home turns into a rental with a conventional already locked in. So there are options, just depends on what your family's needs are at this time. Hope this helps!