Kentucky VA Cash-Out Refinances

Kentucky VA Cash-Out Refinances


Kentucky VA Cash-Out Refinances
Net Tangible Benefit (NTB)

  • NTB standards apply to all cash-out refinancing loans.
  • The NTB consists of the NTB Test, Loan Comparison Disclosure, and the Home Equity Disclosure

NTB Test for Cash-Outs

All cash-out refinancing loans must pass the NTB test. The requirement is met if the refinancing loan satisfies one of the following:
  • The new loan eliminates monthly mortgage insurance; or
  • The loan term of the new loan is less than the loan term of the loan being refinanced; or
  • The interest rate of the new loan is less than the interest rate of the loan being refinanced; or
  • The monthly (principal and interest) payment of the new loan is less than the monthly payment of the loan being refinanced; or
  • The monthly residual income is higher as a result of the new loan; or
  • The new loan is used to payoff the interim construction loan; or
  • The new loan LTV is equal to or less than 90 percent of the reasonable value of the home; or
  • Refinance of an adjustable-rate mortgage to a fixed rate mortgage

Loan Comparison Disclosure

  • The lender must disclose to the borrower a comparison of the new loan to the existing loan being refinanced.
  • VA requires lenders to generate two loan comparison disclosures
  • One within three (3) business days of the initial loan application
  • One at closing
  • The borrower must certify receipt of both disclosures
  • The Initial 3-Day Disclosure requires lenders to provide a reasonably accurate estimate within three (3) business days of the application
  • The Final Loan Closing Disclosure “shall be accurate with respect to the new loan info, while the initial loan info may be a ‘generally accurate representation’ of the existing loan.”
  • Contents of the Initial 3-Day and Closing Disclosures include: refinancing loan amount v. payoff amount of refinanced loan; interest rate of each loan; mortgage loan type of each loan; term of each loan;total payments on each loan; and LTV of new loan v. loan payoff to current value of loan being refinanced

Home Equity Disclosure

  • Discloses the amount of equity being withdrawn, with explanation how removal of equity may affect the sale or refinance of the home in the future.
  • For initial equity disclosure, the lender may use estimated loan payoff or unpaid principal balance and estimated current property value to determine equity being removed.
  • For final disclosure at closing, lender must use final payoff amount and reasonable value shown on the Notice of Value.

Net Tangible Benefit for IRRRL’s

  • INTEREST RATES
  • If the loan is fixed rate to fixed rate then the new loan rate must be at least 50 basis points better than the loan being refinanced.
  • If it is a fixed rate to ARM then the new rate must be at least 200 basis points better than the loan being refinanced.
  • DISCOUNT POINTS
  • The lower interest rate cannot be produced solely from discount points unless: Points are paid at closing;
- VA IRRRL’s with discount points require an exterior only appraisal to establish the LTV



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Joel Lobb
Mortgage Loan Officer
Individual NMLS ID #57916

American Mortgage Solutions, Inc.



Text/call:      502-905-3708
fax:            502-327-9119
email:          kentuckyloan@gmail.com




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