Refinance a VA Loan
Is it really possible to Refinance a VA Loan? The answer is yes they can be refinanced. There are times when extra money is needed and lowering your monthly payment can do that. It is a difficult decision to make as your home is very important to you and extending the life of your loan may not be what you would prefer to do.
Options to Refinance a VA Loan
However, the holder of a VA loan does have several options to Refinance a VA Loan. One option is to request a line of equity otherwise known as a “Cash Out” refinance for veterans and the other is similar to a traditional refinance called a “Streamline Refinance” or Interest Rate Reduction Refinancing (IRRRL) loan. Which one is best for you?
The “Cash Out”, as just mentioned, is similar to a line of credit or home equity loan. Basically the home owner is using the equity or money that has been built up in their home to obtain a loan. This type of loan is only available to those living in the primary residence. In addition, the borrower can refinance up to 90% of their homes appraised value. Unfortunately this benefit is not available for those who reside in the state of Texas.
The other criteria required for this type of loan to be an option is for there to be a sufficient amount of equity in the home, there is no time requirements on the ownership of the current loan and the closing costs can be included in the loan. This type of loan, like the traditional counterpart, is an option for those who need extra cash but don’t want to take out a regular loan. The money obtained can be used for anything from buying a new care to paying medical bills.
The second option mentioned to Refinance a VA Loan, “Streamline Refinance” is when the current mortgage is completely refinanced to lower the payment. The primary criteria for this loan is that it can only be utilized when refinancing the original mortgage on the property. There are several benefits to this type of loan.
One benefit is that a higher interest rate is exchanged for the closing costs to be paid by the lender. Another option to avoid paying the closing costs is to have them included within the new loan itself. There is no requirements for an appraisal, however the mortgage company does have the option to require one if they feel it necessary.
Some other things to consider is that the borrower cannot receive any payout of monetary funds, the current mortgage terms must have been adhered to for a minimum of twelve months and if there are any liens on the property, they are subordinate to the borrower’s VA loan. The borrower can opt for a 15 year compared to a 30 year loan however the payments could be higher due to the time frame has been reduced by half the payoff time.
When considering a refinance of your home, consult with several lenders to find out how they can help you and what they have to offer. This is the time to ask questions and compare. If you are leaning towards one lender over another but they aren’t offering everything the competition is, ask them to see if they will match to keep your business. It is possible to Refinance a VA Loan to meet your financial needs and with the best lender.