VA Refinance loans are backed by the Department of Veteran Affairs and offer a lot of benefit to veterans looking to save money. This special loan program is designed specifically for women and men who are active military, veterans, or surviving spouses. The objective of this program is simple; to improve veterans’ financial situation by refinancing into a lower payment or term, payoff high interest debt or cash out for home improvement. If you are eligible and qualify, the program allows for you to refinance or cash out up 100% of the value of the home with no mortgage insurance. This means you save money and get a better rate. Once you understand the basic steps involved with getting refinanced you will soon realize what a simple and uncomplicated process it really is to lower your monthly obligations by using your VA entitlement.

Types of VA Refinance Loans

VA Streamline Refinance (IRRRL)

The VA Streamline Refinance Program also known as “The VA Interest Rate Reduction Refinance Loan” (IRRRL) is designed to lower your interest rate by refinancing your existing VA loan. If you are currently in a VA loan and would like to lower interest rate by refinancing, the VA has made it easy for you. Since you are already qualified for a VA loan initially it’s a very simple and quick process to lower your monthly mortgage payments by taking advantage of this popular streamline refinance program.

What are the Advantages of a Streamline?

  • Fast turnaround time 
  • No appraisal required 
  • No income verification 
  • No debt to income calculation 
  • Streamlined paperwork process 
  • Primary, investment or second home OK 

What are the Requirements? 

  • In order to be eligible for the IRRRL you will have to already be in a VA loan
  • You have meet previous VA loan requirements
  • No late payments in the past year on current VA mortgage
  • Your new IRRRL must be lower than current one to qualify
  • Converting an ARM to a Fixed is allowed even if payment goes up
  • 620 FICO score or higher to qualify

What is a VA Funding Fee and how much is it for a Streamline

The VA funding fee is collected by lenders at closing and is financed into the loan which helps offset the cost to fund the VA streamline program. It’s a requirement on all VA loans except when the veteran has had a service-related disability in which case they can be exempt from paying this fee. The funding fee is .5% for a veteran of active duty and for National Guard or Reservist

What Documents are Required for a VA Streamline?  

  • A copy of your driver’s license, or government issued photo I.D. 
  • A copy of your DD Form 214 release paper or Statement of Service if active military 
  • A copy of your current mortgage statement 
  • A copy of the Declarations page from your Homeowner’s Insurance policy 

VA Cashout Refinance

The VA Cashout Program is a great strategy to use the equity in your home to payoff high interest debt or simply cash out for personal use.

It’s one of the easiest ways to consolidate high interest debt, including credit cards under one low fixed payment per month which may be tax deductible to help you save even more. You can also use it to refinance out of other types of mortgages like a conventional loan to get more favorable terms or even pay a second mortgage off with no mortgage insurance.

 What are the Advantages of a Cashout? 

  • Cashout up to 100% LTV 
  • Payoff high interest debt 
  • Can roll in all closing costs 
  • Debt to income ratio up to 50% 
  • No monthly mortgage insurance 

 What are the Requirements? 

  • Primary residence only 
  • Minimum credit score 620 
  • No late payments over 30 days in last 12 months 

 What About the VA Funding Fee? 

  • The funding fee for first time use is 2.15% for a veteran of active duty and 2.4% for National Guard or Reservist 
  • For second or subsequent use the funding fee is 3.3% for a veteran of active duty and 3.3% for National Guard or Reservist 

 
What’s Required for a VA Cashout Refinance? 

  • A copy of your driver’s license, or government issued photo I.D. 
  • A copy of your W2’s for the past 2 years or complete tax returns if self employed
  • Your last 30 days’ worth of pay stubs, showing your current year-to-date gross income.
  • A copy of your DD Form 214 release paper or Statement of Service if active military
  • The “Note” from your current mortgage 
  • Awards letters showing any disability, pension, or Social Security monies you are receiving
  • A copy of the Declarations page from your Homeowner’s Insurance policy

VA Refinance Loans can be an incredible benefit for you and your family. Whether you’re looking to consolidate debt, take cash out for home improvements or other reasons, or get out of a bad loan and into one that’s backed by the Department of Veteran Affairs

Frequently Asked Questions: 

Is it possible to defer two mortgage payments?
Yes, it’s possible to defer two mortgage payments as part of your refinance. 

There is little to no equity in my home, can I still refinance?
Yes, you can. A VA streamline will allow you to refinance without an appraisal

Will there be an income check to qualify?
No, the lender will only verify if you are still employed but will not verify actual income. That is why debt to income is not a factor in qualifying for a VA Streamline Refinance. 

Do I need a Certificate of Eligibility for a Streamline?
Typically, this is not required since used the COE to qualify for the original VA mortgage 

Will my loan amount increase by doing a Streamline?
If you choose to roll in your closing costs instead of paying for them a closing your loan amount will increase by this amount including the VA funding fee. But by deferring two mortgage payments, receiving an escrow refund, and the savings per month your breakeven on the streamline is typically realized quickly.

Can I subordinate a 2nd mortgage?
Yes, you are allowed to subordinate a 2nd mortgage and just payoff your first mortgage as long as the lien holder will allow it.

Is there a limit to how much I can cashout?
No, you can cashout up to the full 100% of the appraised value or can cashout less if you choose without penalty.