VA Loan Refinancing Options
If you're looking to refinance your VA loan, you have a few choices available to you. There are two major options to consider for your VA loan refinance. These options include VA Streamline refinance and the VA Cash Out refinance - used both for taking cash out of the equity on your home and refinancing from a conventional loan to a VA Loan.
The Streamline Refinance or IRRRL
Streamline refinance, also called an Interest Rate Reduction Refinance Loan (IRRRL), is a great option for borrowers who currently have an existing VA loan and wish to lower their interest rate - saving additional money each month. This type of refinance is beneficial not only because it is meant to lower the borrower's interest rate, but it also offers features that include no appraisal or credit underwriting package is required when applying, no out-of-pocked exenses, less documents and more lenient requirements.
Borrowers should understand that if they are refinancing an adjustable rate mortgage (ARM) to a fixed rate, there is the possibility that their rate may increase.
Individuals who currently have a VA loan and have built up equity in their home may wish to consider Cash Out refinance (also called Debt Consolidation refinance). This type of refinance can allow the borrower to take cash out or pay off debts. The borrower can receive cash out for up 90% of the value of their home. This money can then be used to pay debt or make improvements to the home.
The last type of VA refinance is Conventional to VA refinance. This option is for individuals who are eligible for a VA loan, but do NOT currently have one. In this case, the conventional mortgage can be refinanced to a VA mortgage. A Conventional to VA refinance is beneficial because it requires no out-of-pocket closing costs, no monthly mortgage insurance, and the possibility of a lower interest rate (regardless of credit history). This type of refinance does, however, will require the funding fee which the government uses to insure the loan. This fee can be financed into the loan.