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Think back to how happy you were when you got the loan to buy your current house. Now that time has passed, are you still happy with the interest rate? Whether you obtained your home with a VA mortgage or a conventional one, you may be paying interest rates that are much higher than what the market currently requires. Every time you write your mortgage payment check, you may find yourself annoyed that you are paying a higher interest rate than necessary. If the most affordable option at the time was an adjustable-rate mortgage (ARM), you may prefer the security of a fixed-rate loan.
If you are a Veteran, you have the opportunity to do something about your higher rate or ARM mortgage. By obtaining a VA loan refinance from our network of VA Loan Specialists such as Capital Bank, N.A., you can shave points off your interest rate, lower your monthly payments, and stretch your monthly budget further. The VA offers both a cash out refinance loan and an interest rate reduction refinance loan that can help you.
The cash out refinance loan is very similar to obtaining the initial loan on your property. Though it is good for refinancing loans from any source, you must meet the eligibility for VA home loans and the qualifications from a local VA-approved lender. The advantage is that you can obtain either a lower interest rate on your mortgage, cash back for any good cause, or both. Since you can get cash in hand for the same low interest rate, you can remodel your home, handle tuition bills, or consolidate high-interest credit cards for less than the rate on a home equity loan.
Though the credit requirements are less stringent than for the original loan, you must still meet creditor requirements to obtain a loan. Some lenders will work with a credit score in the 500s, while others require 1000 points more. Some will overlook a late mortgage payment, while others will not. You need to work with the lender to determine whether you qualify. The lender needs to know that you will be able to repay the loan, so many banks require that you have made your mortgage payments on time over the last 12 months.
Regardless of who your lender was for your original loan, any VA-approved lender can help you when it is time for a VA home loan refinance. Capital Bank, N.A. is able to work with you whether you want a cash out loan or an interest rate reduction refinance loan (IRRRL).
With a low interest rate, a cash out VA loan refinance has several advantages:
Not all lenders allow you to take cash out. You may have to shop around with different lenders to find the one that will give you the best deal for your circumstances. Additionally, this type of loan requires an appraisal as well as a new Certificate of Eligibility.
Even if you do not need cash with your VA home loan refinance, you may want just the lower interest rate to lower your payments. The IRRRL, also known as the VA streamline, works for refinancing loans that were originally written through the VA. Many banks will process loans without a new appraisal. Credit requirements vary, although the VA does not require you to be prequalified.
Although the VA streamline is not for you if you need money for home renovation, the one exception is for improvements to make your home more energy efficient. You may include up to $6,000 for this purpose in your IRRRL.
Aside from energy efficiency improvements, the only other things that can be added to your mortgage in a streamline loan are the VA finance fees and closing costs, if your lender requires these. In any case, your loan cannot be any more than 100% of what you owe, plus these fees.
With either of these loans, the goal is to get your mortgage down to a lower rate than what you originally had. The only exception is if you have an ARM loan, where the interest was temporarily lower than a fixed-rate mortgage would require. With a fixed rate, you will normally save money over the course of your loan. The VA will be glad to help you do this.
This loan has several provisions:
Many lenders do not even require a credit check, but this as well as the appraisal requirements may vary by lender.
Applying for a VA loan refinance with cash back is virtually the same as applying for a new home loan. You must provide a Certificate of Eligibility and meet the service requirements. In other words, you must:
Applying for a Certificate of Eligibility is easier than ever. As long as you have your DD-214 proof of service, you can apply online. If you don’t want to take the six weeks or so that it takes to get this certificate by mail, you can work with FortressVALoans.com to obtain your COE in minutes. As long as your records are current and complete in the VA database, your lender can expedite receipt of the form.
If you are applying for an IRRRL, you do not have to produce a new certificate. Only individuals with existing VA loans are able to apply for the streamlined process, so your COE is already on file.
Even if you have a home already, you can still take advantage of VA loan refinance programs. For the cash out options, just contact our loan professionals at (855) 383-5002 or fill out our online application for pre-qualification. For an IRRRL, call us today to see how quickly we can get this loan process started for you.