VA's two cash-out refinance types and the protections each one carries
Type II in practice
Classification
Any VA cash-out where the new loan, including the funding fee, is larger than the payoff is a Type II, whether the extra goes to you as cash or pays financed costs. Type II loans must meet seasoning and net tangible benefit standards, and the lender must give you a comparison showing how much home equity you will have after the refinance.
Last reviewed against the primary sources listed below.
What you will receive
- A comparison of the old and new loans.
- A statement of the home equity removed.
Type questions
Does financing closing costs make a refinance Type II?
It can, if the new loan with costs and fee ends up larger than the payoff.