How to Refinance Your VA Loan
There are approximately 21 million veterans and service people in the United States, and of that number, more than 600,000 took advantage of VA loans (Veterans Administration) in 2018. It’s a valuable benefit for some of our most deserving citizens. With an additional rate cut recently, the opportunities for vets to benefit from refinancing and taking advantage of their home equity has increased.
There are a couple of specific options when it comes to the decision to refinance your mortgage – whether it’s an original VA loan, or not – a streamline program or IRRRL (Interest Rate Reduction Refinancing Loan), and a cash-out refinance loan.
As we discussed previously here, an IRRRL is usually used to reduce the borrower's interest rate and monthly payment when rates are lower than when the mortgage was originally financed. It’s also valuable when converting an adjustable rate mortgage (ARM) to a fixed rate loan.
It’s one of the simplest – ergo, streamline – refinancing processes available as it doesn’t require an appraisal or credit underwriting. It must be implemented on an existing VA mortgage but is minus the usual qualifying hoops to jump through. There are no cash back options on an IRRRL program. The biggest advantage is the ability to refi up to 100% of your home’s value and skip the requirement to purchase mortgage insurance.
The cash-out option is ideal for vets and service members with an existing VA or conventional loan who want to take advantage of the equity in their home to access cash. The qualifications for a cash-out refi are similar to an original mortgage with homeowners needing to comply with a home appraisal, credit report and certain LTV (loan-to-value ratio), but these vary by lenders.
There are no restrictions on the use of the cash-out difference on a refinance, and needs may vary from debt consolidation to student loans, to emergencies to other financial needs. It may also be utilized for home improvement and remodeling projects that would further increase the equity and value in the home.
Because every veteran and service member’s situations are different, experts urge them to evaluate their own requirements and get up-to-the-minute rates and information from a reliable lender. EnTrust Funding (ETF) has experience and knowledge of the market, as well as a variety of programs to suit everyone’s needs. Give us a call today to see if a VA refinance is right for you and your family.