VA Loans and Refinancing

What is a VA Loan?
The VA Loan began in 1944 through the original Servicemen’s Readjustment Act, also known as the GI Bill of Rights. The GI Bill was signed into law by President Franklin D. Roosevelt and provided veterans with a federally guaranteed home with no down payment. This feature was designed to provide housing and assistance for veterans and their families, and the dream of home ownership became a reality for millions of veterans. VA guaranteed loans are made by private lenders, such as banks, savings & loans, or mortgage companies to eligible veterans for the purchase of a home, which must be for their own personal occupancy. The guaranty means the lender is protected against loss if you or a later owner fails to repay the loan. The guaranty replaces the protection the lender normally receives by requiring a down payment allowing you to obtain favorable financing terms.


How Can a Mortgage Refinance Help Me?

A home refinance loan can not only improve your current rate and terms, but can give you a chance to change the type of loan you are in, increasing your loan payoff time.

Refinancing your home loan enables you to replace your existing home loan with a new home loan with better terms while giving you the opportunity to get cash back from the equity you have built in your home. Using the equity in your home is a powerful tool that can help you improve your overall financial well being and pay off high interest loans, debts, and credit cards.


What are my Options?

VA Streamline (IRRRL) Refinance. The Streamline refinance, or Interest Rate Reduction Refinance Loan (IRRRL), is one of the best options for homeowners who already have a VA Loan and would like to refinance into a lower monthly mortgage rate. This refinance type is relatively easy and can be completed quickly, due to the fact that homeowners are refinancing from one VA Loan product to another. With this type of refinance, there are several prominent advantages, including no required appraisal in some cases, no need to obtain another Certificate of Eligibility and little to no out-of-pocket costs. To avoid out-of-pocket costs, homeowners can choose to roll the closing costs and fees into the balance of the loan. There are only a few requirements and stipulations. Primarily, the borrower is not allowed to receive any cash back from the IRRRL and the borrower must also certify that he or she currently or has previously occupied the property.

The VA’s Cash-Out refinance Loan gives qualified veterans the opportunity to refinance their conventional or VA loan into a lower rate while extracting cash from the home’s equity. With the Cash-Out refinance, you have the opportunity to turn the equity in your home into cash. This shouldn’t be confused with a home equity loan, which is a second loan that runs alongside your current loan. The VA Cash-Out refinance loan replaces your existing mortgage instead of complementing it. Qualified homeowners can refinance up to 100 percent of their home’s value for mortgage debt in some cases. In others, homeowners can refinance up to a lower percentage and use the cash to cover debt payments and other needs.