We advise you on every step for lower rates and cheaper down payments.
As a United States Military serviceman or woman, you have already found your dream home thanks to the incredible benefits of your VA Home Loan. The Department of Veteran’s Affairs offered it to you so your family could escape its cramped living space and obtain home ownership. However, did you know there are a whole new set of financial benefits when you refinance too?
While the housing market fluctuates during uncertain times, many veterans and active-duty military choose to refinance their VA Home Loans. You can work with an approved VA Lender to refinance and reduce your interest rate and decrease your monthly mortgage payment. VA Loan Refinancing can also pull cash directly out of your house and even pay off debt, making it a dependable option.
When seeking to refinance your VA Loan, your VA lender will know the ins and outs of how to do so, but it is always wise to learn more before entering the conversation. This education will help ease the VA Loan process and give you a better understanding of what VA refinancing is and how it works.
What is VA Mortgage Refinancing?
Refinancing a VA mortgage is the process of taking out a new VA loan that replaces an old one. Many choose to take advantage of this VA program when lower interest rates are available so they can reduce their monthly payments and increase their monthly cash flow. It is also an excellent option for those looking for a more stable and predictable payment amount when they have previously been paying an adjustable-rate mortgage.
VA mortgage refinancing is not done through the VA but through a VA-approved private mortgage lender, bank, or credit union. Typically, you can borrow up to the Freddie Mac loan limit amount.
What are VA refinancing options?
Interest Rate Reduction Refinance Loan (IRRRL)
This loan, also called a VA Streamline Refinance, is an excellent option if you wish to seek a lower interest rate on their payments. In order to refinance with an IRRRL loan, you must already have an existing VA Loan, and the new rate must be lower than the original. You would be switching from an adjustable-rate loan during this process.
In most cases, this type of loan requires little paperwork and only a few requirements for approval, such as a minimum credit score, minimum income, and no delinquent mortgage payments within the last 12 months.
IRRRL loans typically do not require large amounts of money upfront, and, additionally, you can roll closing costs into the loan. The home does not have to be your current primary residence, but you must have lived in the house at some point in the past. For instance, if you have now moved but wish to keep the existing home that you bought with a VA Loan, it will still qualify for refinancing.
It is important to note that you cannot take out any cash from home equity with this type of loan.
Cash-Out refinancing is available to any veteran with a VA or conventional loan. With this type of refinancing, you can refinance your home’s newly appraised value to tap into the equity of your house for cash. Many choose this option to pay off debt or finance home renovations.
To qualify for a cash-out refinance, lenders require a minimum credit score, a VA-approved appraisal, and that the home be your primary residence. This loan requires paying all closing costs and fees up front, but you may use cash from the loan to accomplish this.
Refinance Eligibility & Fees
To determine if you are eligible for a VA Refinance Loan, you must meet specific qualifications. These qualifications are the same as when seeking eligibility for a VA Home Loan. Among these are that you must meet active duty service qualifications and have a Certificate of Eligibility (COE). VA-approved lenders can assist you in assessing and obtaining these requirements.
Refinancing a VA Loan comes with a VA Funding Fee unique to this program compared to other mortgage programs. For IRRRL loans, the fee is 0.5% of the loan amount. For Cash-Out loans, it ranges from 2.3%-3.6%, depending on if it is your first VA loan.
VA lenders waive this fee for those with a service-related disability, spouse of a service member who died in the line of duty, or Purple Heart recipient.
Refinance with a Veteran-Based Team You Can Trust
Nobody knows how to help active-duty and retired military personnel refinance their VA Loans better than we do. Jimmy Vercellino, Marine Corps vet, launched our team to advise and help your family with all of your VA Home Loan financing needs. Our mission is to give back to veterans and military members who have already sacrificed everything.