Veterans who possess an adjustable rate mortgage (ARM) and owe more than they can afford have options. A VA Refinance Loan can enable qualified homeowners the ability to capitalize on lower rates, as well as getting cash back and using the money in a variety of ways. While not being able to make the current payment is a great reason to refinance, it is hardly the only reason. According to the Bureau of Economic Analysis the median interest rate for an overdue mortgage as of January 2012 was nearly six percent. Because lenders are currently offering much lower rates, a Re-FI in this situation is a no-brainer. Other solid reasons for a mortgage refinance include an adjustable-rate mortgage into a fixed rate loan. Cashing out to consolidate debt, taking equity out of the house, and paying down other loans can be short-term solutions for some people. Consolidating two mortgages; certain homeowners are wary of future rate jumps and combine their mortgage with a home equity line of credit. Divorce, a re-fi is often the necessary course of action to remove the separated spouse from the note. In terms of the VA home loan, the two prominent refinance programs open to applicants are the Interest Rate Reduction Refinance Loan (IRRRL) and the VA Cash-Out Refinance.
What is an IRRL Refinance?
An IRRRL aka IRRL (Interest Rate Reduction Loan) is a VA refinance loan from an existing VA loan to a new, lower interest rate VA loan. Sometimes referred to as a streamline refinance, the IRRL loans are “rate and term” loans. Rate and term loans are not for cashing out equity. If you do not have a VA loan or if you currently have a VA loan and would like to cash out equity apply for a NEW VA refinance. The IRRL will allow you to borrow up to 100 percent of your current loan amount plus a .5 percent IRRRL Funding Fee (unless exempt). Because the property owner is refinancing from one VA loan to another, the process of securing the VA streamline is uncomplicated and fast-moving. The IRRRL provides numerous benefits. Because Fees and closing costs can be added into the new loan, there are limited altogether no out-of-pocket expenses. Additionally, there is no required appraisal (most of the time), and no required Certificate of Eligibility. The primary requirement of this type of refinance is that the borrower cannot receive any cash back. Additionally, the applicant must certify that they currently or previously occupied the property. To qualify the loan holder has to be up to date on their mortgage with no more than one 30 day late payment inside of the previous twelve months.
To apply for an IRRRL, fill out the VA Loan Application.
If you currently have an adjustable rate mortgage and owe more than you can afford and would like to apply for a free VA loan modification call : 888-573-4496, or to apply for an IRRRL.
What is a NEW VA Refinance Home Loan (all purpose refinance) ?
The Cash-Out Refinance Loan allows eligible veterans the ability to lower the rate of their conventional or VA loan while simultaneously taking cash out of the home’s equity. This is not the same as a home equity loan, which functions as an additional loan running concurrently with the existing loan. The VA-Cash-Out refinance loan becomes your new mortgage This type of refinance loan is available to a veteran loan holder regardless of whether or not they currently possess an FHA, USDA, VA or traditional loan. Eligible property owners have the ability to refinance up to the full value for their homes mortgage debt under certain circumstances. In other situations, homeowners can refinance to a lower percentage and use the cash discretionarily. This is a great option for loan holders looking to cash in on their equity now to pay off debt, finance home improvements, or to navigate through an unforeseen financial emergency. As with the IRRRL, the funding fee and closing costs can be absorbed into the entirety of the loan amount. Cash-out refinance loans are subject to the standard underwriting guidelines established by The Department of Veterans Affairs.
Both types of VA refinance loans are available to:
- Veterans and former military
- Discharged service members
- Active duty military
- Most reservists (call for details)
- Some surviving spouses (call for details)
Neither credit nor appraisals are always required for a VA refinance. Each VA home loan is funded by entities that may or may not have overlay restrictions. These restrictions vary by loan investor.
What is required to apply for a VA refinance?
- Military service or eligibility for a VA guarantee.
- Property must be owned by an eligible veteran, service member, spouse of the same or another qualified person.
- All others liens and loans must agree to subordinate.
- No late payments (within the past 12 months) on any consumer debt.
What is a NEW VA Refinance Home Loan (all purpose refinance)?
If you do not have a VA loan – New refinance VA loan: A New VA refinance loan can be used to:
- Lower your Interest Rate
- Lower your payment
- Obtain a cash-out
- Consolidate your debt
Both types of VA refinance loans are government mortgage products insured against default by the United States Department of Veterans Affairs. With the exception of an IRRRL, VA refinances allow you to borrow up to a maximum of 90 percent of a residential properties value. For IRRRL, 1) an appraisal is not required; 2) proof of income documentation is not required. The maximum VA refinance loan is 90 percent plus the maximum VA Refinance Funding Fee of 3.30 percent (unless exempt). To apply for a VA refinance, fill out the VA Home Loan Application. Closing costs can be paid for with a lender credit, or included in the loan amount making the refinance $0 out of pocket.
To inquire which lender is right for you, call 888-554-6846.
To apply by phone, call 888-573-4496. The applications desk is available 24 hours a day.