A Veteran asks the following question: Our first mortgage has a VA loan, and our second mortgage (which is a home equity loan) does not. Can we combine the two and refinance into one single VA loan?

The answer is yes, but there are some guidelines. The rules concerning a VA Cash Out Refinance are as follows: The VA requires a funding fee of 2.15% for a first time use and a 3.3% funding fee for subsequent users. In addition, the maximum loan amount is 90% of the appraised value of the property. (Not available in Texas). Unless you have a VA minimum disability which exempts the VA funding fee, it would be in your best interest to compare the both the conventional or fha mortgage rate on a cash out refinance.

Another important factor to remember is that if the equity in the property is greater than 20%, there will not be any Mortgage Insurance necessary on a conventional loan.