Are you looking to refinance your VA mortgage but don’t know which road to take from here?
There’s no universal right timing to refinance a VA mortgage as it always boils down to your finances and your future plans. However, even with VA’s low-interest advantage, refinancing today could give you even more edge as rates still remain on historically low levels.
If you currently hold a VA mortgage, you have two refinance options. Each path is designed to cater to a specific need.
(a) If you want to tap into your home’s equity, consider a Cash-out Refinance
(b) If your purpose is to save on your interest payments by lowering your current interest rate, a VA Streamline Refinance or Interest Rate Reduction Refinance Loan (IRRRL) is the way to go
For simplification, we will only focus on the VA IRRRL program in this article. Before you head down the path, here are the most important things that you should know first.Find a lender today.
No strict underwriting
The VA does not require income or employment verification. It also does not pose strict standards on minimum credit scores, although many lenders choose to do so.
Most lenders require their borrowers to have a credit score of 620 or above.
The home doesn’t have to be your primary residence
Most purchase or refinance programs strictly only loan money to borrowers who use the property as their primary residence. With VA IRRRL, there is no need to live in the home as long as you have occupied the property previously and can provide proof for doing so.
This is the minimum occupancy requirement set by the department.
No appraisal needed
Along with its non-strict underwriting procedure, lenders are also not required by the VA to conduct an appraisal on an IRRRL. Yet, similarly, some lenders may still choose to do so.
A VA mortgage appraisal is one of the most dreaded parts of the VA mortgage process because they usually take too long and follow strict standards.Speak with a lending professional today.
The refinance should result to a new loan with terms that save the borrower money. This is done by either lowering the interest rate or shortening the term of the loan.
The program also dictates that you should be able to recover the cost of refinancing within 36 months of payments.
Refinancing with the VA IRRRL program does not always result to lower monthly payments. If you refinance an adjustable-rate mortgage into a fixed-rate, you will most likely have a higher rate with a higher payment.
In today’s rising interest rate climate, the general advice from experts is to refinance into a fixed-rate loan.
Other things to consider:
(a) check for requirements that you can waive when comparing lenders if you want faster refi processing (e.g. appraisal)
(b) beware of refinancing scams called “churning.” Avoid refinancing before you can recoup the cost of your new loan
(c) VA IRRRL comes with a funding fee that costs around 0.5 percent of the overall loan amount
Speak with an experienced and reputed VA-approved lender today about your VA refinance concerns.Click to See the Latest Mortgage Rates»