Understand who qualifies to refinance a VA loan

The US Veterans Affairs Administration has helped provide home loans for veterans since 1944. The program allows both veterans and active duty members to obtain affordable mortgages that the VA guarantees will be repaid to lenders. The program has been expanded to include refinancing of these loans and certain conditions apply.

Using VA Loan Eligibility

To qualify for a refinance loan through VA, you must have used your initial home eligibility. In other words, it must be a VA loan to refinance VA. A new certificate of eligibility is not required. Your previous Certificate of Eligibility serves as proof of the use of your right.

Loan limits

VA refinance loans are subject to certain program-defined loan limits. These limits limit the amount of liability for reimbursement required by the program. Each county determines the amount of the loan limit. Generally, lenders will approve up to four times the basic entitlement amount of $ 36,000 for a home loan, without a down payment.

Financing commission

A financing fee is required for all those applying for loans through the VA Secured Loan Program. Payment of the fee is required at loan closing. You can pay the financing fee in cash or transfer it to property financing. Financing fees can range from 0.5 percent to 3.3 percent. The financing fees for the second use of your eligibility are generally higher than the first use. Certain disabled veterans and surviving spouses are not required to pay a financing fee.

Refinancing loan with interest rate reduction

The program allows you to refinance up to 100 percent of the value of the home. Although the program does not require credit checks or new appraisals, lenders may impose these requirements according to their own rules. Unlike a VA home purchase loan, you do not need to certify that you will occupy the home. You only have to certify that you have previously occupied it. The IRRRL program cannot be used to pay off a second mortgage. Generally, the second mortgage must be approved. Your current mortgage payments must be current, with no more than a 30-day late payment in the past year.

Cash-out refinance loan

If you want to take cash out of your home for medical expenses, children’s college, or home improvement costs, VA offers a Cash Out Refinance Program that allows you to use your equity to finance these important expenses. The above qualifications apply similarly to these loans. You can also refinance up to 100 percent of the property’s value. Unlike the IRRL loan, a credit report, income verification, and property appraisal are required. You must also certify that you will occupy the home that is being refinanced.

Certain costs associated with refinancing can increase the cost of the loan to an amount greater than the fair market value of the property. These costs can include state and local taxes, discount points, and other closing costs. Refinancing applicants should always consider these additional costs when determining whether refinancing their VA loan is a favorable idea.

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