NMLS ID 966439 | MB 0921703
VA Basics: Refinance Rules
The VA Loan program gives eligible veterans and their families access to refinancing options that either lower monthly mortgage costs or take cash out of a home’s equity.
There are two options available for VA borrowers to refinance their homes: the VA Streamline Refinance, also known as the Interest Rate Reduction Refinance Loan (IRRRL), and the VA Cash-Out Refinance.
Two Refinance Options
The “streamline” refinance, referred to as the Interest Rate Reduction Refinance Loan (IRRRL) option will most likely result in a lower monthly mortgage rate. This option allows borrowers to refinance into a fixed rate or adjustable rate mortgage (ARM) loan. However, if the borrower is refinancing from an existing VA ARM loan to a fixed rate loan, the interest rate may increase.
The benefits include:
- quick processing time since veteran is going from one VA option to another
- no re-appraisal required
- Limited credit check
- no new Certificate of Eligibility required
- no closing cost option available and funding fee is reduced to .05% and may be added to existing loan
The VA has the following set requirements:
- Veteran may not receive any cash back greater then $500.00.
- Veteran must prove they live or have lived in the home. VA will allow non owner occupied properties. Ask a USAVA representative for more information.
- To qualify, homeowner must be current on his or her mortgage with no more than one 30-day late payment within the past year.
- An IRRRL must be used to refinance a property that a Veteran has used their VA loan eligibility. Must be a VA to VA refinance.
- The IRRRL will reuse the entitlement originally used by the Veteran.
The Cash-Out Refinance Loan
refinances a conventional or VA loan into a lower rate and allows the borrower to take out cash from the home’s equity. The veteran may refinance up to a 100 percent of the home’s value to put towards debt or refinance at a lower interest rate and use the cash for anything.
The benefits include:
- the Cash-Out refinance option is available for all loan types
- closing costs and funding fees may be added to existing loan
- cash may be used as the borrower wishes to pay off any type of debt
The requirements are as follows:
- Veterans in Texas do not qualify for the Cash-Out option due to state regulations.
- Veteran must currently live in the home.
Our goal at USAVA is to work with veterans to achieve the best possible financing and lower their interest rate and monthly mortgage payment. Please contact one of our loan specialists 888-842-0490 today to get your process started!
This is our second refi with them. We would recommend this company to anyone!