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TRYING TO REFINANCE MY VA LOAN AND CASH OUT TO PAY DEBT OFF

I live in AZ, that means that my wifes debt is taken into account when qualifying for the loan.  I have had a VA appraisal done on my home and i would only need 85-90% LTV to make this work.  What i am running into is the fact that my wife has student loans (2) that will be in repayment within a year of closing.  Everything else works as i have already tried through Chase (never again) and had them shoot me down with that crappy reason the week of closing after i provided all conditions needed.  Is there anyone out there that does not require for my wifes std loans to be deferred a year out in order to close?  She is not on the loan now and will not be on the future one but AZ is a common law state so her debt gets taken into account.
  • June 12 2014 - US
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Answers (5)

I do a lot of VA loans at New American Funding and we are Direct VA lender and can do 100% cash out financing.  We also do manual underwrites and can push the debt ratio to 55% in some cases.  Feel free to contact me if you would like me to take a look at this.  I used to work for the Exclusive Lender of the VFW so I have a lot of experience with these situations.
  • June 14 2014
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Steven,

Great advice given, is your current home a single family or 2 unit property?  If you have not already contacted another loan officer or bank please do and get a second set of experienced eyes on this loan.  Reach out to me through my profile if you would like to discuss further.
  • June 13 2014
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WILLIAM gives some very good ideas....perhaps those actual payments will be less....given the community property state rule, whats yours is hers and hers yours....so it is what it is......now have you thought about going to 100% new va CASHOUT loan...perhaps to consolidate her loans? if that is enough of course..perhaps that 100% with "actual payments might get you to  a level of 54 or 55% debt ratio and make it happen for you..

good luck
randy
  • June 13 2014
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There are several suggestions I have that might help.. 1. is to contact the student loan lender and get a letter stating what her actual payment will be once it's out of deferment.. typically, if a student loan is in deferment, and you don't provide the payment schedule, the lender will use 2% of the outstanding balance as a monthly payment.. this is usually higher than what your actual payment would be..  2. you can try consolidating all the student loans into one loan, and that will most always result in a lower payment, and this can be done while you are waiting to close on the refinance.  3. Since VA allows for 100% cash out, you could take out even more and pay off the student loans, or other debt to lower your DTI. 
    I would suggest you have a competent local loan officer look at your complete loan scenairo and let them explain to you what can be done to make your refinance happen..  Typically, when dealing with the larger "big box banks" such as Chase, you are not really dealing with a loan officer, you're dealing with an application taker.. they dont have the proper eduction or experience in creative financing.. that's why I always suggest you use a local mortgage broker.. they are licensed, educated, and have the necessary experience in finding a way to make it happen..
    Since I'm local (Scottsdale), i would be able to look at your scenario in detail to see how we can help, and our lender allows for your appraisal to be transferred so you wont have that additional fee to deal with..

Feel free to reach out to me via my profile if you have any additional questions or concerns.  William J. Acres, Arizona's Mortgage Expert.

  • June 12 2014
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If community property state the spousal debt will always be counted into your qualifying, that isn't a lender requriement it is a program requirement.    Is the credit report for her showing a monthly payment?   Are you able to get a letter from student loan to show the expected payment, sometimes that will come in lower than a default estimate a lender might use (2% of balance for example).

There are VA lenders that allow to 100% of property value and also at very high debt ratios if you are able to get "automated approval". If no other choice, maybe consolidating her student loans into your refinance could get your numbers in line (not sure how large her balances are).

Typically the "Big Bank" lenders like Chase, Wells Fargo, etc are going to be more conservative with what they allow on VA loans, I'd look for a mortgage bank or broker in your area that has more flexibility and see if they can structure your application better to allow you to qualify.

  • June 12 2014
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