Mortgage rates continue to stay at all time lows, and many military service members and Veterans want to know how to refinance their mortgage to take advantage of the lower rates. Refinancing with VA loans can be a huge financial advantage for families.
Refinancing your mortgage with a VA loan can help save on the cost of the overall loan and your monthly payments. Homeowners that refinance can use the extra cash to save, invest, cover increases to costs of living, and more. It can also mean that you end up saving over the lifetime of the loan. 1% interest can make a huge difference over 30 years.
Ways to Refinance with a VA Loan
There are multiple ways to refinance with a VA loan.
1. VA cash-out refinancing program
The VA cash-out refinancing program is available to veterans with an existing conventional or VA home loan. It allows homeowners that have equity in their homes get some cash back with their refinancing. Keep this in mind though; how lenders approach this will vary depending on their internal guidelines for refinancing mortgages. If you’re interested in a cash-out refinancing program, it’s important to remember that you will probably need to shop around to find a lender that allows cash-out refinancing.
2. Refinancing a Conventional loan into a VA loan
Did you know that most military service members, reservists, Veterans, and National Guard members don’t take advantage of their benefits? If you’re eligible for a VA home loan but currently have a conventional mortgage, then you could consider refinancing into a VA loan.
Conventional loans that are refinanced to a VA loan falls under the cash-out refinancing program, which means there is a funding fee attached. However, unlike the VA cash-out program, there is no cash back involved.
The big advantage of refinancing a conventional mortgage with a VA home loan is that you can usually refinance up to 100% of the home’s value. With VA loan rates as low as they are today, this is a great opportunity.
3. Refinancing an existing VA home loan through Interest Rate Reduction Refinance Loan (aka VA Streamline Refinance program)
If you have an existing VA loan, you might be eligible for an Interest Rate Reduction Refinance Loan (IRRRL), also known as a VA Streamline Refinance program. Homeowners that opt for IRRRL can reduce their monthly payments or shorten the term of their mortgage.
The term, “streamline”, is very accurate. Many homeowners like the streamlined process of refinancing their VA loan with IRRRL. While the lender might require a credit check or appraisal, the VA does not. This helps cut down on some of the paperwork, which can often feel exhausting.
Take your time to figure out which route is best for you, and don’t forget to shop around for the best lenders. It pays to look and find the best rates.