Refinancing With a VA Loan
The Department of Veterans Affairs offers numerous ways to make homeownership more accessible for those who have served in the United States Military. One way that they do this is giving current and former service members the option to refinance with a VA loan. Borrowers can take advantage of lower interest rates to bring down their mortgage payments and even get cash back to use on paying down debt, home renovation, and other items.
Types of VA Loan Refinancing Available
There are two programs offered to VA borrowers to let them refinance and take advantage of a lower interest rate. They are the VA Streamline Refinance—sometimes called the Interest Rate Reduction Refinance Loan—and the VA Cash-Out Refinance.
The VA Streamline Refinance is ideal for those who already have VA loans and want to take advantage of dropping interest rates and lower their monthly payments. This type of refinancing requires minimal paperwork and the borrower can add the closing costs to their overall loan amount, allowing them to avoid out-of-pocket costs. In some cases, an appraisal will be required, but not always.
VA Cash-Out Refinance can be used by someone with an existing VA loan or a conventional loan from another lender. It is best for those who have a solid reason for needing access to cash. The borrowers take out a loan against the equity in their home, getting the value in cash. Due to the currently low interest rates, this can be an ideal way for a veteran or active service member to repair their home, take care of an emergency, or handle other financial concerns.
Eligibility for VA Loan Refinance
Overall, if someone is eligible for a VA loan, they are also eligible for refinancing with a VA loan. Applicants must meet at least one of the following criteria:
They served a minimum of 90 consecutive days in active service at a time of war
They served a minimum of 181 days of active service during a time of peace
They served a minimum of six years in the National Guard or Reserves
They are the spouse of a service member who either died in the line of duty or later on as a direct result of an injury incurred during their service
Of course, determining eligibility is only the start. To learn more about the process of refinancing with a VA loan or get professional guidance in your journey, speak with one of our loan professionals.