Whether or not you currently have a VA guaranteed loan, if you are eligible for a VA home loan you may be eligible for a VA refinance on your current mortgage. There are a few different VA refinance options:
If you did not use your VA benefit when purchasing your home but want to lower your monthly payments through a refinance, you will be asked to provide the same documentation required for a new loan (such as paystubs, tax returns and bank statements). Also, this refinance program allows only 90% of the homes appraised value as the new loan amount. By Refinacing the consumers existing loan, the consumer total finance charges may be higher over the life of the loan.
VA Streamline Refinance (IRRRL)
The VA Streamline Refinance is also known as the Interest Rate Reduction Refinance Loan (IRRRL). The IRRRL allows you to refinance your current mortgage interest rate to a lower rate than you are currently paying.
The Streamline loan is extremely popular because of its ease of use: once you have already been approved for your initial VA purchase loan, it is simple to lower your interest rate and experience considerable savings. In most cases, a loan officer or lender with expertise in VA loans should be able to complete the loan under a months time.
VA loan closing costs can be rolled into the cost of the loan, allowing veterans to refinance with no out-of-pocket expenses. Additionally, it may be possible for the lender to pay off the cost of the refinance.
In order to qualify for a VA Streamline, you must meet the following requirements:
By Refinacing the consumers existing loan, the consumer total finance charges may be higher over the life of the loan.
VA Cashout Refinance
A secondary VA refinance loan type is the VA Cash-Out refinance loan. The Cash-Out refinance allows borrowers to refinance their conventional or VA loan into a lower rate while also taking cash from the homes value.
Functionally, the VA Cash-Out refinance loan replaces your existing mortgage instead of functioning like a home equity loan, which it is often confused for. A qualified borrower can refinance up to 100 percent of their homes value in some cases.
The Cash-Out refinance loan is a loan type available in any form whether USDA, FHA, or conventional. Veterans generally choose to use the VA Cash-Out over other loan types because the period to pay off the loan is extended, and also, generally comes with a lower interest rate.
Just like the VA Streamline Refinance loan, the home must be used as a principal dwelling by the owner. There is no set period of time that you must have owned your home, however, you must have sufficient equity to qualify for the loan.
By refinancing the consumer’s existing loan, the consumer’s total finance charges maybe higher over the life of the loan.