When you refinance your mortgage, you take out a new home loan and use it to pay off your existing home loan. As Experian points out, there are several reasons why homeowners go to the trouble of taking out a new mortgage. It could be a chance to snag a lower interest rate or a lower monthly payment or to pay off your loan sooner. It might be a desire to change something about your loan terms or the type of loan that you have. Or, it might be the opportunity to transform some of your home equity into cash. What about refinancing VA loans? If you want to refinance with a VA loan, you’re in luck. There are a couple of different options.
Refinancing VA Loans
The home loans offered by the U.S. Department of Veterans Affairs (VA) often get rave reviews. Since eligible borrowers can get approved for a loan with 100-percent financing, competitive interest rates, and great terms, it’s easy to understand why. What about refinancing VA loans? That’s also possible. In fact, the VA offers two different refinancing options. Each of the choices has its own unique requirements and its own purpose. As a result, they each have their own mix of pros and cons. If you want to refinance a VA loan, you’ll want to study your choices carefully and select the one that’s right for your goals and circumstances.
The VA’s Interest Rate Reduction Refinance Loan
The VA’s interest rate reduction refinance loan (IRRRL) is also called the streamline refinance because it’s meant to provide a simpler, speedier approach for borrowers. However, that speed comes with some tradeoffs. For starters, it’s only for those who want to trade a current VA loan for a new VA loan. As a result, this form of refinancing is only available to homeowners who already have VA loans. Those with non-VA loans are out of luck. In addition, you can’t use this refinancing product to turn your home equity into cash. However, it’s the perfect choice if you want to capitalize on falling interest rates and secure a new loan with lower monthly payments. It can also be a smart way to swap the unpredictability of an adjustable-rate mortgage for the stability of a fixed-rate mortgage.
What are the eligibility requirements for an IRRRL? According to the VA, each of the following must be true if you hope to qualify for VA streamline refinance:
- The loan that you plan to refinance must be a VA loan.
- You must certify that you either currently live in or previously lived in the home covered by the loan.
- If you have a second mortgage on your home, the holder must agree to make the new IRRRL the first mortgage on your home.
The VA’s Cash-out Refinance Loan
The VA’s cash-out refinance loan doesn’t offer any shortcuts on paperwork or timelines, but it is available to a wider range of borrowers. Do you currently have a VA loan? Do you currently have a non-VA loan? Either option will allow you to pursue a VA cash-out refinance loan. Are you eager to turn some of your home equity into cash to pay for home improvements or school? Would you like to make investments or consolidate debts? As the name of this refinancing product suggests, it’s designed to let people cash out a portion of their home equity when they refinance.
What are the eligibility requirements for a VA cash-out refinance loan? According to the VA, each of the following statements must be true if you hope to qualify for a VA cash-out refinance loan:
- You must qualify for a Certificate of Eligibility from the VA.
- You must meet the standards set by both the VA and your lender for things like credit, income, and other relevant items.
- You must plan to live in the home that will be covered by the cash-out refinance loan.
PrimeLending: Manhattan, Kansas, takes pride in serving the military veterans, active-duty members, and families who have dedicated their lives to service. We’re loan experts who know all the ins and outs of the VA loan program, so we’re ready to help you get the most out of your housing benefits. If you’re thinking about refinancing with a VA refinance, contact us today.