If you’re looking to get better loan terms for your VA home mortgage, then you may consider refinancing. People look to refinance loans for many reasons, and VA homebuyers can take advantage of numerous benefits with a VA mortgage refinance.
At First Fidelis, we offer many VA refinancing options for U.S. service members, veterans, and even spouses of military members. Let’s take a look at what a VA mortgage refinance is and when you should consider refinancing your home loan.
What Is a VA Mortgage Refinance?
Veterans Affairs (VA) mortgages or VA loans are available to qualified military homeowners. VA home mortgage loans offer lower interest rates and decreased monthly payments, as well as many other benefits, including:
- No down payments.
- Guarantees from the U.S. Department of Veterans Affairs, so no mortgage insurance is required.
- No minimum credit score, even though suitable credit is recommended.
- Allowance for a higher debt-to-income ratio than other loans.
- Availability to active-duty U.S. service members, veterans, National Guard members, US Reserve members, and spouses of veterans.
A VA mortgage refinance allows military homeowners to use the proceeds for various needs, including home improvements, paying off debt, and more. Typically, when borrowers look to refinance their home mortgage, they want to receive a lower interest rate or reduce their monthly repayment amount by receiving a longer-term loan.
When Is It a Good Time to Refinance?
The best time to refinance your home loan is when interest rates are more favorable and your credit score has improved. With a steadier income and credit line use, lenders are more willing to offer better VA refinancing rates.
For active-duty members, you should consider how long you’re planning on staying in your home. If there’s any possibility of being restationed in the near future, it may not be a good time to refinance. Instead, consider refinancing your VA home mortgage when you know you’ll be living in your home long-term.
VA Mortgage Refinancing Options
As a U.S. service member or veteran, you have some options for mortgage refinancing. Here is a preview of some of the options we provide to military members.
VA Streamline (IRRRL) Refinance
The Interest Rate Reduction Refinance Loan (IRRRL) option is perfect for borrowers looking to lower their current interest rate. A streamline refinance also allows you to switch from an adjustable interest rate to a fixed-rate loan.
Some benefits of an IRRRL include:
- Backed by the VA.
- No private mortgage insurance is required.
- Minimal documentation is required, so the application process is simple.
- Appraisal and appraisal fees are not necessary.
This refinancing option also allows you to refinance prior residencies even if you no longer live there. If you were recently stationed in a new area and still own your previous home, you can still refinance your mortgage.
The Cash-Out refinancing option for VA home mortgages allows borrows to take advantage of their home equity and access cash to be used for other purposes. This type of refinancing works by replacing your existing mortgage with a new, larger loan. You then receive the difference as cash, which could be used for home improvements, paying off debt, funding education, or emergencies.
Some benefits of a cash-out refinance include:
- This program can be used if you don’t already have a VA-backed mortgage, as long as you meet eligibility requirements.
- You don’t have to pay for mortgage insurance.
- You can use the cash to pay for whatever you need.
With a cash-out refinance, the home must be your primary residence. The exact appraised value of your home that you can borrow against will also vary depending on your lender.
If you’re a U.S. service member or a veteran looking to refinance your mortgage, there are different options available to you that offer an array of benefits. Our mortgage loan experts at First Fidelis can help you determine the right option for you and what you’re eligible for. To learn more, or to get started with your Kansas City mortgage lender, contact us or start your pre-approval application today.