A basic guide to VA refinance
A VA loan is a mortgage loan offered to our country’s service members, backed by the United States Department of Veterans Affairs (VA). This loan aims to make it easier for veterans to finance their home purchases. This article discusses the eligibility for VA loans, their refinancing options, tips for refinancing, and other helpful information.
Who is eligible for VA loans?
Qualifying for a VA loan requires the service members to have a specific credit score and income. Some lenders also require you to have a valid COE or Certificate of Eligibility. Besides, some companies consider your conduct, duty status, and length of service.
What are the types of refinancing options available?
There are two primary VA refinance options, as discussed below:
- VA IRRRL
VA Streamline or VA Interest Rate Reduction Refinancing Loan (VA IRRRL) is the more commonly utilized option of the two. They are called VA streamlines loans because of how simple they are. You can avail of the VA IRRRL without income verification or credit underwriting.This low-cost refinance option is available only for veterans who have an existing VA loan. It is helpful if you are looking for interest rates that cost less than your current rates. It also extends the loan repayment timeline, giving you some breathing space.
- VA cash-out refinance
This VA refinance option gives you cash against your home value. These loans are available to qualified homeowners irrespective of whether or not they have an existing loan. If you qualify for this option, you can have your home’s equity refinanced up to 90 percent.The requirements for loan-to-value refinancing and the guidelines are not standard and can vary from lender to lender. You can use the VA cash-out as a basic refinance if you have non-VA mortgages.
Which loan companies refinance VA loans?
Few things should be kept in mind when determining which lender to seek refinancing from, such as the minimum credit score and the down payment requirements. Once the eligibility criteria are met, consider how fast the loan can be processed and whether or not the interest percentage and loan period work with you. Some of the best loan providers for VA refinancing are:
- Veterans United
- NBKC
- Fairway Independent Mortgage
- Veterans First Mortgage
- Navy Federal
Tips before seeking to refinance
Getting lost in the mountain of details when it comes to financing is a problem we all face. The terms and conditions can confuse the best of us and can be a grueling task. To make things easier, here are a few tips:
- The credit score you obtain may probably differ from the score the lender pulls up on you. It is still prudent to check your credit score and consider the lenders that fall into your category.
- Ensure you have a COE. You are going to need it at some point. It is, therefore, better to have it at hand than to extend the process by waiting for it.
- VA loans and refinancing options are excellent benefit opportunities. An agent can probably help you make the most of the benefits being offered. To not miss out on anything and make financing your dream home a possibility, an experienced agent is someone to look for.
How much does refinancing a VA loan cost?
The interest rate for availing the VA loan services is 2.3 percent. For people who have previously used the program, the interest rate increases to 3.6 percent. However, increasing the down payment percent from 0 to at least 5 percent will reduce the interest. The cost of getting an IRRRL to refinance on an existing VA loan is around 0.5 percent of the current loan.
