VA Home Loan Refinance: Do You Qualify For VA Refinance And Is It Worth It?

In 1994 Congress introduced and pass a number of programs that were aimed at helping those who had served their country transition home more easily. One such program was the the creation of the VA loan guarantee.

While Veterans Affairs does not give out the loans themselves, they act to guarantee a mortgage in case of default. Because of this guarantee, lenders are more confident and able to offer eligible service members mortgages without strict verification, highly attractive interest rates, and without the need for a down payment.

Excitingly, these favorable terms can also be taken advantaged of if you’re looking to refinance your home. While there are some requirements that will be checked, it is important to know that you can still apply for a VA refinance, even if you originally took out a conventional or FHA mortgage.

Here at Mortgage Right, we know that the economic climate can be less than ideal sometimes and you might consider refinancing in efforts to lower monthly payments and save money. We are here ready to take every step with you from assessing your situation, seeing if you qualify, and going over what options suit you best.

What Is VA Refinance?

The VA loans repayment option for service members helps them to enjoy potential savings on debt payments from a new agreement when market rates have substantially changed. Depending on your goals, you can opt for either an IRRRL or cash out refinance.

Your Refinance Options

Two options are applicable for your refinance. Here at Mortgage Right, we cover the basics of each option and help you determine the best.

  • Interest rate reduction refinance loan (IRRRL)

It is also known as the VA streamline refinance. This approach enables you to refinance your current loan to lower your interest rate. A reduction in interest rate will decrease your monthly payments helping save up money to pay your mortgage.

Alternatively, you can opt to refinance by switching from the adjustable rate mortgage (ARM) to a fixed mortgage. This option is workable if you have a VA loan.

  • VA cash out refinance

This refinance allows you to literally cash out. We recommend it if you are low on cash, or you are in need of some extra money to pay for a purchase or a debt. This method allows you to refinance your loan up to 100% of your house value.

By doing this, you are able to pay off your current mortgage cost, and use the remaining money for your expenses. Unlike the IRRRL, the cash out alternative is also available to non-VA loan holders. Even if you were eligible for the VA loan, but opted for a conventional or FHA loan for your primary mortgage; this refinance option will be available for you.

Who Qualifies For a VA Refinance?

Qualifying for a VA refinance is easier compared to the conventional alternative, both for the refinance option and original VA mortgage application process.

  • You need to have served time as a veteran, reservist, active service member, National Guard.
  • Surviving spouses of veterans, who have a service-related disability or died while on duty are eligible.
  • National Guard members and reservists must have served for at least six years. If they were in the line of duty, they are eligible after 90 days during war time or 181 days of peacetime service.
  • You need to have a VA loan to qualify for VA refinance. In this case, a certificate of eligibility is not required.

Application Process

Start by visiting your existing lender or a new one of your choice. If you originally took out a VA loan, your lender should quickly be able to confirm your eligibility from your email and start the refi process.

Don’t worry if you originally took out a different type of mortgage, our experts here at Mortgage Right will go over all the changes and help you get started.

Requirements for a VA Refinance

To be suitable for the VA refinance, the following requirements are essential:

•    Loan limit

Veterans Affairs do not have a loan limit, but private lenders will cap your loan limit to reduce the risk of default. The limit for a mortgage in high-cost areas may go up to $625,500 while the normal limit is $417,000.

•    Down payment

Zero down payment is a common practice for a VA loan which makes it popular among service members. This enables you to purchase a home without making any initial payment.

However, if it makes sense, you may opt to make a down payment depending on your preference. Keep in mind that with a higher down payment, the the lower your interest rates usually are.

•    Interest rates

The aim of the VA refinance is to allow you to pay lower rates than what you were previously offered.

•    Fees and costs

Among the available mortgage loans, VA refinance costs are lower. You will only submit a one-time fee which is 1.25% of your loan amount, which is used to ensure this program continues to be available for future VA borrowers. You may opt to roll it over to your loan or pay it in cash.

•    Occupancy of the home

One condition to keep in mind is that if you’re refinancing from a FHA conventional loan, your house must be your primary resident. However, if you opt for the IRRRL option, you will just need to show that you stayed in the house when you originally took out the VA loan.

•    Cash out option

Borrow against your home equity if you need some cash now for expenses. This approach does not apply to the Interest rate reduction refinance loan (IRRRL).

When Is The Best Time For VA Refinance?

Timing is an important factor if you want to take full advantage of a VA refinance program. Are you wondering about which option will work best for you? At Mortgage Right, we understand the efficiency of home loans, and we want to make your experience the best it can be by helping you understand the available refinance options and what works best for you.

We understand everyone is unique and people have varying situations. That is why we guarantee to consider your position while discussing the current rates to assist in making a reasonable decision that will not strain your budget.

Contact us to get more information of the VA refinance options and start saving money.