Veteran refinancing – All one needs to know

Veteran refinancing – All one needs to know

A VA loan is a program established by the US Department of Veterans Affairs. This loan is available to active and veteran service personnel and their spouses. The terms of the loan are generous, which means there is no down payment, prepayment penalties, and mortgage insurance. Moreover, you can replace your current loan with a new one but with different terms. Things you need to know about Veteran refinancing in the USA:

A VA loan in itself is not created by the government of the USA; however, it is backed by a government agency so that the lenders feel comfortable.

To be eligible for this loan, you need to match certain requirements-

  • You should be currently on military duty.
  • You should have served at least 90 consecutive active days during wartime.
  • You should have served for more than six years in the National Guard.

You can quickly refinance a VA loan, and the VA offers a program that is designed in a way that you can refinance it to a lower-rate loan. You can use a VA loan to purchase a home or construct it. You can even use VA finance or veteran refinancing for this purpose. People who struggle with homeownership can also use their VA loan benefits with adapted housing grants.

In case you choose veteran refinancing, you can even reduce your interest rate through the Interest Rate Reduction Refinance Loan (IRRRL). This allows you to replace your current loan and come up with an upfront VA funding fee equivalent to 0.50% of the loan amount. Surviving spouses of veterans who died when they were in service or from a service-connected disability can also apply.

It is essential to understand that to receive a VA streamline refinance, you should have an existing VA loan. The concept of refinancing helps you to get additional benefits at a lower rate of interest.

Veteran refinancing options

VA Streamline (IRRRL) Refinance

This is often called a “Streamline” refinance, which gives the IRRRL option. This is a great option for existing VA loan holders who wish to make significant savings and take advantage of lower interest rates. It also helps to reduce monthly mortgage costs. This kind also involves little paperwork and no out-of-pocket costs. It is a simplified loan with relaxed qualifications for veterans and service members. Moreover, you don’t require a VA appraisal or go through the VA lender underwriting process to get this loan approved.

Cash-Out Refinance

Cash Out, a refinance option, is for those with a VA or conventional loan looking to take advantage of their home equity to get cash for home improvements and emergencies. This loan is available for qualified veteran homeowners, irrespective of whether they have a conventional loan or USDA. You need to understand that you can’t take out cash from a VA streamline. For this, you need a VA cash-out to refinance only.

Conventional to VA refinance

VA loans can refinance other already existing loans that include conventional mortgages and FHA. It is not common, but if you choose to refinance from a traditional to a VA loan, you will be at an advantage when current property values are concerned.

People who choose veteran refinancing may realize that refinancing helps get higher finance charges over the life of the loan. In the current economic climate, it is a great time for military homeowners to take advantage of the benefits found in veteran refinancing. By availing of this finance option, you can take advantage of lower rates and decrease monthly mortgage payments.