December 10, 2018

VA Refinance Benefits

Whether you have a VA home loan or a traditional mortgage, you might also qualify for a VA Refinance loan or a VA IRRRL (Interest Rate Reduction Refinancing Loan) or “streamline” loan. These programs, available to qualified veterans and active duty military and spouses, may enable you to lower payments and even squeeze out a bit of home equity cash.

VA Refinance

Refinancing Basics

Why refinance anyway? Typically, homeowners consider refinancing their mortgage to get a better interest rate, or as a cash-out payment for home equity–a part of the home’s value.

Refinancing is not always a good move, which is why it’s critical you consult a lender that participates in the VA mortgage or home loan program. They can advise you on your qualifications, any financial repercussions of a refi, and the VA programs available.

VA Refinance and IRRRL Programs

Two variations of a VA Refinance are available to veterans and active duty military personnel. In either case you must live most of the time in the house you’re refinancing—it cannot be a rental property or a temporary or vacation home.

  • VA Refinance Program – you can refinance a VA guaranteed mortgage or a traditional home loan with this program. If you have equity in the home you can also use it as a “cash-out” option. First, choose a lender that participates in the VA Loan program. Your lender will verify your eligibility for the new VA loan, including a credit check. Just because you have an existing home mortgage doesn’t necessarily mean you’ll be approved for a refinance. You must have good credit and enough income to pay a monthly mortgage and other key monthly bills. You will also need a current Certificate of Eligibility (COE) that you can download and complete on the Department of Veterans Affairs website.

The VA Refinance program is limited to mortgages of 30 years or less and may only cover 90% of your home’s value. Ask your lender if there are any additional fees you’ll be required to pay as part of the refinance and plan accordingly.

  • VA IRRRL Program —The Interest Rate Reduction Refinancing Loan is also commonly called the “Streamline” loan and it does exactly what it sounds like it may do: lower your current mortgage interest rate. Unlike the above VA Refinance, there is no cash-out or home equity option and you must already have a VA Mortgage.  Because this is an “interest rate reduction” loan it stands to reason that part of the requirement for this program is that your new loan must actually provide you with lower interest rates.

Because you are free to choose any lender you’d like that handles IRRRL loans, it’s important you choose wisely. Ask about additional fees that might be required and beware any attractive options to bundle incentives into the loan that could lift your loan amount and payments higher.

Refinancing your home’s mortgage with a VA refinance loan could be a valuable benefit when used wisely. Learn more about these programs by visiting the Department of Veteran’s Affairs website. [http://www.vba.va.gov/VBA/ ]

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