In 2018 nearly 400,000 military veterans took advantage of VA mortgage loans to purchase a new home. According to a recent study, the number of VA purchase loans has increased by 59 percent in the pasts 5 years. And it’s no wonder why that number has increased - typically, there is no down payment required, and the interest rate can be lower than conventional loans. But what many veterans may not know is that you can also refinance into a VA home loan. These refinancing options can be used for consolidating debt, getting a lower rate or home improvement projects. There’s basically two types of VA refinance - the VA Streamline loan, or with a VA cash-out refinance. Here’s how each works:
The VA Streamline Loan, or Interest Rate Reduction Refinance Loan (IRRRL) as it is sometimes called, can be used to refinance your current VA mortgage loan to a lower interest rate or a reduced term. The VA IRRRL offers a reduced VA funding fee (.5 percent) so the costs are significantly reduced compared to a VA cash-out refinance. Generally, to obtain this loan you need to have a VA-backed home loan, are using the IRRRL to refinance your existing VA-backed home, and can certify you currently live in or used to live in the home you wish covered by the loan.
With a cash-out refinance, you can consolidate debt and use those debt payments to shorten the loan term or use it to take cash out of your home equity to pay off debt or school or make home improvements. In some instances, you can lower your rate. To apply for this loan, you must qualify for a VA-backed home loan Certificate of Eligibility, meet VA’s (and your lender’s) standards for credit, income, and any other requirements, and live in the home you are refinancing.
Talk to a NASB loan expert to find out which VA refinancing option is best for you by calling 855-465-0753, or click here .