For homeowners looking to save money in the long term, refinancing your mortgage can be a great strategy. Whether you’re looking to switch things up and get a lower interest rate or get some up-front cash to consolidate and decrease your overall debt, there are a lot of options available for those who qualify for a VA loan. If you are a veteran with 90 days of consecutive wartime service, 181 days of peacetime service, or six years in the National Guard or Reserves, read on to see what refinancing strategies may be best for you.
Can I Refinance My Mortgage With a VA Loan?
A VA loan is a great benefit available for military veterans with the aforementioned service requirements. Since these loans are guaranteed by the federal government, they have much lower credit requirements, and they also carry lower interest rates. On the whole, they can make life a lot easier for veterans looking to buy a home, so whether you’re a first time home buyer or are already a homeowner with an existing mortgage, it’s well worth your while to look into a VA loan.
If you’re considering refinancing your mortgage with a VA loan, you’ll be pleased to find that it’s fairly straightforward. The only way to go from a conventional loan to a VA-backed one is by using what is known as a cash-out. In order to use the cash-out method, you will pay a one time funding fee, which goes towards housing benefits for future veterans, so you won’t just be helping yourself, you’ll be helping your service family down the road.
Once you have paid the funding fee, you will have access to cash based on your home’s equity. The great thing about this method is that there are no restrictions on where the money goes, so if you have any sort of financial emergency or want money to pay off other sources of debt, a VA-backed cash-out refinance loan is an ideal solution.
Can I Refinance an FHA Loan To a VA Loan?
Outside of a VA loan, an FHA loan — one guaranteed by the Federal Housing Authority — is one of the easiest to qualify for. Since this is another type of federal assistance, the barriers to getting one are lower than an average loan, which can be a great short-term solution for those looking to buy a house. However, because of the lower requirements, this type of loan is protected by a monthly mortgage insurance premium (MIP).
While this is a necessary evil for those who might not have the initial capital for a large down payment, paying monthly insurance on your mortgage will seriously add up over time, and if you qualify for a VA loan it may benefit you to refinance. Because of the initial fees, switching to a VA loan can cost you thousands of dollars, so it may not be feasible for everyone. If you can make it work, eliminating the long-term cost of MIP can save you tens of thousands of dollars.
Can I Refinance My Existing VA Loan?
Even with the low interest rates of a VA loan, you may still want to look into big picture savings, if possible. Maybe your financial situation has changed — such as a promotion, a new job, or an inheritance — and you find yourself in a position to make a higher mortgage payment. If it works in your monthly budget, a higher payment will allow you to attain lower interest rates, which will translate to major savings over the term of your loan. Maybe the reverse has happened, and you want a solution that will offer you a lower monthly mortgage payment so your family will be on better footing for the immediate future.
If you’re looking to refinance your existing VA loan, an Interest Rate Reduction Refinance Loan (IRRRL) is the way to go. This allows you to renegotiate the terms of your mortgage. Since it means transitioning from one VA loan to another, it is a relatively quick process — something that can be completed in just a couple of weeks if you qualify.
How Can The Home Loan Expert Help?
Hero Loan, The Home Loan Expert’s VA Loan Program. If you’re thinking about refinancing your mortgage, Hero Home Loans is here to walk you through the process. Our expert team is dedicated to meeting the needs of veterans in a quick, convenient fashion, making sure you have the right loan for your home.
Collaborating with our experts will ensure you find the right lender who understands your individual needs moving forward. Unlike many lenders, who default towards a blanket approach of simply jumping on the lowest interest rate, we get to know you and match you with the loan rate that is best for you.
To find out more and see if you would benefit from refinancing, contact us to talk to a loan expert today!