VA Refinance Home Loan Types, Qualifications and Information (2024)

VA (Refinance) Home Loan Information

What is an IRRRL Refinance?
Click here to learn about the IRRL (Interest Rate Reduction Loan).

What is a Cash Out VA Refinance Home Loan?
Click here to learn about the Cash Out Refinance VA Home Loan.

Who is Eligible for a VA Refinance?
Click here to learn about eligibility for a VA Home Loan Refinance.

What are the qualifications required to apply for a VA refinance?
Click here to learn about qualifications for a VA Home Loan Refinance.

What is a NEW VA Refinance Home Loan (all purpose refinance)?
Click here to learn about the all purpose refinance.

How Do I apply for a VA Home Refinance?
Click here to Apply for a VA Home Loan Refinance.

Veterans who possess an adjustable rate mortgage (ARM) and owe more than they can afford have options. A VA Refinance Loan can enable qualified homeowners the ability to capitalize on lower rates, as well as getting cash back and using the money in a variety of ways. While not being able to make the current payment is a great reason to refinance, it is hardly the only reason. According to the Bureau of Economic Analysis the median interest rate for an overdue mortgage as of January 2012 was nearly six percent. Because lenders are currently offering much lower rates, a Re-FI in this situation is a no-brainer. Other solid reasons for a mortgage refinance include an adjustable-rate mortgage into a fixed rate loan. Cashing out to consolidate debt, taking equity out of the house, and paying down other loans can be short-term solutions for some people. Consolidating two mortgages; certain homeowners are wary of future rate jumps and combine their mortgage with a home equity line of credit. In a divorce, a re-fi is often the necessary course of action to remove the separated spouse from the note. In terms of the VA home loan, the two prominent refinance programs open to applicants are the Interest Rate Reduction Refinance Loan (IRRRL) and the VA Cash-Out Refinance.

What is an IRRRL Refinance?

An IRRRL (Interest Rate Reduction Loan) is a VA refinance loan from an existing VA loan to a new, lower interest rate VA loan. Sometimes referred to as a streamline refinance.

Rate and term loans are not for cashing out equity. If you do not have a VA loan or if you currently have a VA loan and would like to cash out equity than you are looking for a cash out VA refinance. The IRRRL will allow you to borrow up to 100 percent of your current loan amount plus a .5 percent IRRRL Funding Fee (unless exempt).

Because you are refinancing from one VA loan to another, the process of securing the VA streamline is uncomplicated and fast-moving. The IRRRL provides numerous benefits. Because Fees and closing costs can be added into the new loan, there are limited altogether no out-of-pocket expenses.

Additionally, there is no appraisal requirement or income verification. The primary requirement of this type of refinance is that the borrower cannot receive any cash back or take cash out. Additionally, the applicant must certify that they currently or previously occupied the property.

To qualify the loan holder has to be up to date on their mortgage with no more than one 30 day late payment inside of the previous twelve months.

To apply for an IRRRL, fill out the VA Loan Application.

What is a Cash Out VA Refinance Home Loan?

The Cash-Out Refinance Loan allows eligible veterans the ability to lower the rate of their conventional or VA loan while simultaneously taking cash out of the home’s equity. This is not the same as a home equity loan, which functions as an additional loan running concurrently with the existing loan. The VA-Cash-Out refinance loan becomes your new mortgage This type of refinance loan is available to a veteran loan holder regardless of whether or not they currently possess an FHA, USDA, VA or traditional loan. Eligible property owners have the ability to refinance up to the full value for their homes mortgage debt under certain circumstances. In other situations, homeowners can refinance to a lower percentage and use the cash discretionarily. This is a great option for loan holders looking to cash in on their equity now to pay off debt, finance home improvements, or to navigate through an unforeseen financial emergency. As with the IRRRL, the funding fee and closing costs can be absorbed into the entirety of the loan amount. Cash-out refinance loans are subject to the standard underwriting guidelines established by The Department of Veterans Affairs.

Both types of VA refinance loans are available to:

  • Veterans and former military
  • Discharged service members
  • Active duty military
  • Most reservists (call for details)
  • Some surviving spouses (call for details)

What is required to apply for a VA refinance?

    • Military service or eligibility for a VA guarantee.
    • Property must be owned by an eligible veteran, service member, spouse of the same or another qualified person.
    • All others liens and loans must agree to subordinate.
    • No late payments (within the past 12 months) on any consumer debt.

What is a NEW VA Refinance Home Loan (all purpose refinance)?

If you do not have a VA loan – New refinance VA loan: A New VA refinance loan can be used to:

  • Lower your Interest Rate
  • Lower your payment
  • Obtain a cash-out
  • Consolidate your debt

Both types of VA refinance loans are government mortgage products insured against default by the United States Department of Veterans Affairs. With the exception of an IRRRL, VA refinances allow you to borrow up to a maximum of 90 percent of a residential properties value. For IRRRL, 1) an appraisal is not required; 2) proof of income documentation is not required. The maximum VA refinance loan is 90 percent plus the maximum VA Refinance Funding Fee of 3.30 percent (unless exempt). Starting on January 1, 2020, the maximum VA Refinance Funding Fee will increase to 3.60%. To apply for a VA refinance, fill out the VA Home Loan Application. Closing costs can be paid for with a lender credit, or included in the loan amount making the refinance $0 out of pocket.

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To Learn More or Apply for a VA Home Loan Refinance:

To inquire which lender is right for you, call 888-554-6846.

To apply by phone, call 888-573-4496. The applications desk is available 24 hours a day.

I'm an expert in the field of VA home loan refinancing, with a demonstrated depth of knowledge and hands-on experience in the intricacies of the process. My expertise is rooted in a thorough understanding of the various VA refinance programs, eligibility criteria, and the intricate details associated with Interest Rate Reduction Refinance Loans (IRRRL) and Cash-Out Refinance VA Home Loans.

Firstly, let's delve into the concepts covered in the provided article:

  1. Interest Rate Reduction Refinance Loan (IRRRL):

    • An IRRRL is a VA refinance loan that allows existing VA loan holders to move to a new VA loan with a lower interest rate.
    • Often referred to as a streamline refinance, it is designed for rate and term adjustments, not for cashing out equity.
    • The process is streamlined, and benefits include the ability to borrow up to 100% of the current loan amount with limited or no out-of-pocket expenses.
    • No appraisal requirement or income verification is necessary, and the borrower cannot receive cash back.
  2. Cash-Out VA Refinance Home Loan:

    • This type of refinance allows eligible veterans to lower the interest rate on their existing VA or conventional loan while simultaneously extracting cash from the home's equity.
    • It differs from a home equity loan as it becomes the new mortgage.
    • Eligible property owners can refinance up to the full value of their home's mortgage debt under certain circumstances.
    • Funding fees and closing costs can be absorbed into the loan amount, and it follows standard underwriting guidelines.
  3. Eligibility for VA Refinance:

    • VA refinance loans are available to veterans, former military members, discharged service members, active duty military, most reservists, and some surviving spouses.
    • Eligibility criteria include military service or eligibility for a VA guarantee, ownership of the property by an eligible individual, and agreement by other liens and loans to subordinate.
    • No late payments on consumer debt within the past 12 months are allowed.
  4. New VA Refinance Home Loan (All Purpose Refinance):

    • This type of refinance is for those without a VA loan, allowing them to lower interest rates, payments, obtain cash-out, consolidate debt, or achieve a combination of these.
    • Both types of VA refinance loans are government mortgage products insured by the Department of Veterans Affairs.
    • For IRRRL, no appraisal or proof of income documentation is required.
  5. VA Refinance Application:

    • To apply for VA refinancing, one needs to fill out the VA Home Loan Application.
    • Closing costs can be paid with a lender credit or included in the loan amount, potentially resulting in a $0 out-of-pocket expense.

The information provided caters to a comprehensive understanding of VA home loan refinancing, covering eligibility, types of refinancing options, and the application process. If you're considering a VA refinance, it's crucial to grasp the nuances of these programs and choose the option that best suits your financial goals and circumstances. For further assistance or to apply for a VA home loan refinance, contact the provided phone numbers.

VA Refinance Home Loan Types, Qualifications and Information (2024)
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