Refinancing Your VA Loan?

With such a dramatic drop in mortgage rates in the last a number of years, quite a few veterans are sitting on VA loans with rates a lot higher than the existing marketplace. And with the media touting "the lowest rates in generations," you can bet a lot of folks are asking about refinancing their houses. Why not, when you can lessen your interest rate and monthly payment employing the VA "Streamline" Program with minimal to no out-of-pocket expenses?

What makes this a "streamline" program is that the lender will not always call for an appraisal (saving you about $450), a full credit report (only mortgage history and scores), or even ask you for the usual income, asset, or debt information. A large number of lenders verify your employer, position, and time on the job, but income is not typically taken into consideration. If an appraisal is required, it just has to cover the amount of your new loan. If an appraisal is not required, then the value of your property will not matter, although there are exceptions. This program can even be utilized for rental properties that are nonetheless carrying a VA loan on them.

Depending on the timing of your loan closing, you could be able to "skip" one (or even two) mortgage payments. (The term "skipped" is used loosely here, as those payments are accounted for in your payoff and your new loan balance, but nevertheless, those payments remain in your pocket.) Also, once your existing VA loan has been paid in full with your existing lender, you will be refunded the whole balance of your escrow account to do with as you wish. The most very important benefit is a lower, fixed rate to lower your monthly housing costs for the life of your VA loan or to cut year's off of your mortgage by refinancing to a 15-year term.

There are standard minimum qualifications to use the VA Streamline Refinance Program. For starters, your present loan ought to be a VA loan. No past due mortgage balances or late mortgage payments are allowed in the final twelve months with case-by-case exceptions. There are also exceptions for the minimum credit score, but 640 is typically the target on VA. You also can't get any cash back at closing and the savings on your new VA loan should meet minimum thresholds. As always, other qualifications may well apply.

There are real expenses involved in refinancing your VA loan of course, but those expenses are offset by the quantity of funds you save each month. The fundamental formula is to calculate how quite a few months it will take you to recoup the price of your refinance. Frequently, if you plan to own your home at least that long, then refinancing is to your benefit. Be positive to subtract your "skipped" payments and your escrow refund, as those are genuine dollars you keep in your pocket as a result of refinancing. Any skilled VA Household Loan Specialist will be happy to run this analysis for you.