How do I refinance my VA loan?
|
|
Interest rates are lower now than they were when I got my VA Home Loan. Since it is under the VA Loan guaranty program, am I just stuck?
The VA home loan guaranty program recognizes that there are cases where refinancing an existing loan not only saves the home owner money, it may mean the difference between being able to make a payment and being forced to give up your home. The Interest Rate Reduction Refinancing Loan (IRRRL) is designed to allow you to take advantage of reduced interest rates or restructure a loan from an adjustable rate mortgage (ARM) to a fixed rate. There are a few facts and guidelines you need to be aware of before you decide to refinance your VA Loan.
Show the Proper Interest
When applying for an IRRRL - sometimes referred to as a "Streamline" or a "VA to VA" loan – you need to understand the interest rate comparisons. Unless you are refinancing an adjustable rate mortgage, the interest rate must decrease on the new mortgage. If you are converting an ARM to a fixed rate veteran home loan, the interest rate may increase. The advantage of this type of refinancing is that your interest rate does not fluctuate.
Know the Rules
Unlike a traditional VA home loan, no appraisal or credit underwriting package is required by VA. However, lenders may require an appraisal and credit report anyway. Likewise, a certificate of eligibility is not required, but the property you are refinancing must have been purchased using your entitlement. If your lender requests confirmation, they may use the e-mail confirmation procedure for interest rate reduction refinance. The new loan can structured with "no money out of pocket" by including all costs associated with the IRRRL in the new loan or by setting the new loan interest rate high enough to enable the lender to pay the costs. However, you may not receive any cash from the loan proceeds.
Make sure that the items that you choose to roll into the loan amount do not cause the loan to exceed the appraised value of the home. This could result in your losing any advantage you might gain from refinancing. You must also beware of refinancing a 30 year note for 15 years. While you will save interest over the life of the note, you need to make sure that the payments do not increase to the point that you can no longer afford the payments.
Trackback(0)
 |
TrackBack URI for this entry
