Home refinance loans allow borrowers to change the interest rate or terms of their current loan by replacing it with a new one. Almost any type of loan can be refinanced so long as the borrower qualifies, which includes VA home loans.
If you’re a military veteran or active-duty service member who’s considering refinancing, you may have questions about what the process entails. Below, we’ve explained the benefits in detail as well as the steps involved.
What Are the Benefits of a VA Refinance Loan?
There are many reasons why a homeowner may choose to refinance their VA home loan. Perhaps unexpected medical expenses have come up. Or maybe the homeowner is looking to fund some renovations. In other cases, interest rates may have dropped since the borrower originally took out the loan and now, they’re looking to take advantage of a lower rate.
Some potential benefits of refinancing include:
- Switching to a shorter loan term
- Getting a lower interest rate
- Lower monthly mortgage payments
- Accessing cash by tapping into equity
- Debt consolidation
Refinancing should be taken seriously and exercised with caution. A borrower should only refinance if it makes financial sense.
VA Streamline Refinance
VA Streamline Refinance Loans are a home financing option that allows borrowers to refinance at a lower interest rate, reducing their monthly mortgage payments. Sometimes, these loans are also referred to as Interest Rate Reduction Refinance Loans (IRRRLs).
The process for a VA Streamline Refinance is straightforward. There is very little paperwork involved (hence the term “streamline”). This option also keeps costs to a minimum for the borrower. Sometimes, a borrower can pursue this option without obtaining a VA appraisal.
VA Cash Out Refinance
A VA Cash Out Refinance Loan can be a good option for borrowers looking to tap into their equity and access cash. Funds received from this type of refi loan can be used for various purposes, such as paying off debt, funding home improvements, or covering other expenses. Borrowers can also use this option to refinance a non-VA loan into a VA-backed loan.
With a VA cash-out refinance, the homeowner replaces their existing VA loan with a new loan that provides them with cash, and the new loan is secured by their home. The loan amount is based on the current market value of the home, and the borrower must have sufficient equity in the home to qualify for a cash-out refinance. To confirm the value of your home, you will need to get your property appraised by a VA appraiser.
Have Questions? We’re Here to Help!
Do you have questions about the VA home loan refinance process? We’d be happy to assist you! Call today to speak to a member of our team!